Family Guarantee Home Loans, Without the Confusion.
Use equity in a family property to help buy your next place – first home, upgrade or investment – without a huge deposit or LMI, and with everyone clear on the risks.
- Use family equity instead of a full 20% cash deposit
- Often avoid paying Lenders Mortgage Insurance (LMI)
- Clear plan to remove the guarantee as soon as you can
We can chat with just you, or with you and your parents together.
What Is a Family (Limited Security) Guarantee Loan?
A Family Guarantee home loan lets a close family member – usually a parent – use some of the equity in their property as extra security for your loan. You still own the property you're buying. They're not giving you cash – they're backing part of the loan so you don't need a full 20% deposit in savings.
It can be used for:
- First homes
- Upgrades
- Some investment purchases (depending on the lender)
Use Equity Instead of a Big Deposit
- Get in sooner without waiting years to save 20%
- Your smaller savings can help cover costs (stamp duty etc.)
- Helpful when income is strong, but savings aren't there yet
Skip Lenders Mortgage Insurance
- Extra security helps keep the overall LVR at 80% or below
- That can save tens of thousands in LMI premiums
- More of your money goes into your home, not insurance
Parents Don't Back the Whole Loan
- They guarantee a set amount, not every dollar you owe
- Their home is used as backup security only for that slice
- We structure it with a clear path to remove the guarantee later
When Can a Family Guarantee Help?
A few everyday examples of how families use guarantees to make things happen.
First Home: Good Income, Small Deposit
Jess and Tom rent in Perth and earn good money, but have only saved $25,000.
They find a home for $520,000.
Normally they'd need around $100,000+ saved to avoid LMI.
Tom's parents use part of the equity in their home as a limited guarantee, so:
- Jess and Tom can buy with their smaller deposit
- They usually don't have to pay Lenders Mortgage Insurance
Upgrade: Need More Space, Not More Saving
Kylie and Mark own a small unit and now have two kids. They've outgrown the place and want a house around $650,000.
They've saved a bit, but not a full 20% deposit after selling costs. By using a limited guarantee from Kylie's parents:
- They can buy the bigger place sooner
- They don't have to spend years rebuilding a big deposit
- Once they build equity in the new home, the guarantee is removed
Fresh Start on One Income
After a separation, Ben is on one income. He can afford repayments, but only has $20,000 left in savings. He finds a smaller home for $480,000.
Ben's parents back him with a capped guarantee, so:
- Ben can buy a home for himself and the kids
- His parents don't need to hand over cash
- The guarantee amount is limited, and comes off once Ben's loan drops below 80% of his home's value
How a Family Guarantee Works – In Simple Terms
The bank looks at the value of your new property plus a slice of your parents' equity, instead of just your place on its own. That extra security lets you borrow more while keeping the overall risk at a level the bank is comfortable with.
You Find a Place
You've found a property for $500,000. You have $30,000 saved, but not the full 20% deposit.
We Check Parents' Equity
Your parents' home is worth $700,000 and they have plenty of equity. We work out how much of that is realistically available as extra security.
Bank Uses Both Properties
The bank takes a limited guarantee over part of your parents' equity to cover the deposit gap. Your savings + their equity together give the lender enough security.
You Buy, Then Build Equity
You buy now, and over time:
- You pay down your loan
- Your property (hopefully) rises in value
- Once your loan is at 80% or less of your home's value, we can ask the bank to remove the guarantee
Example – Buying for $500,000
Without a Family Guarantee
- House price: $500,000
- To avoid LMI, you'd usually need $100,000 deposit (20%)
- You've saved $30,000
- You're $70,000 short, so you either pay LMI or wait and keep saving
With a Family Guarantee
- Your parents' home has enough equity
- The bank uses a limited guarantee over about $70,000 of that equity
- Your $30,000 savings plus their equity give the bank what it needs
- You can buy the $500,000 place now and usually avoid LMI – without your parents handing over cash
What Does the Guarantee Mean for Your Parents?
Parents aren't making your repayments – but they are putting their home on the line for part of the loan. Everyone needs to be clear on what that involves.
⚠️ This is an important commitment. Make sure everyone understands the risks and responsibilities before proceeding.
What They're Backing
- A limited dollar amount, not your entire loan
- A mortgage is placed over part of their property as extra security
- If things went badly wrong and your home sale didn't clear the debt, the bank could chase up to that guaranteed amount from them
What They're Not Doing
- They don't give you cash
- They don't make your regular repayments
- They don't guarantee every new loan you take later on
- Their guarantee is tied just to this specific loan setup
Things to Talk Through Together
- It may affect their ability to sell or borrow against their home until the guarantee is removed
- Most lenders will ask them to get independent legal/financial advice
- If they're planning to downsize, retire, or help other kids later, we need to build that into the plan
When Does the Guarantee Come Off Their Home?
The goal isn't to keep Mum and Dad tied to your loan forever. The idea is to use their equity to get you started, then remove the guarantee as soon as your own equity is strong enough.
You Build Equity
- Make your repayments
- Maybe put in extra when you can
- Benefit if your home goes up in value
Your Loan Drops to 80% or Less
We Ask the Bank to Remove It
- Revalue the property if needed
- Restructure the loan so it's secured only by your home
- Arrange for the mortgage and guarantee on your parents' home to be discharged
Is a Family Guarantee the Right Move for Your Family?
Often a good fit if:
- Your income is solid, but your deposit is lighter than 20%
- Your parents (or close family) have good equity and steady finances
- They're comfortable staying in their home for a while
- Everyone is okay talking openly about money and risk
- You're serious about treating the loan like a non-negotiable bill
May not be ideal if:
- Your parents are already heavily borrowed or close to retirement
- They want to sell or downsize in the short term
- You're unsure about your job security or ability to meet repayments
- Anyone feels pressured or unsure – it has to be a joint, informed decision
- There are existing family tensions that could be made worse by money stress
Frequently Asked Questions
Want Us to Run the Numbers for Your Family?
We can map out how a Family Guarantee would look for you – loan amount, the guarantee limit on your parents' home, and how long it might take to remove it. If everyone's comfortable, we then handle the lender and paperwork.
We're happy to include your parents or other family members on the call from day one.
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Hey! Connect us with (08) 9122 3929, or email us through office@pilbara.finance, or fill the following form. We will contact you back within 1 hour or prior.
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