Guarantor loans are now the only way to borrow 100% of the purchase price as traditional no deposit home loans have been withdrawn from the market. Did you know that there are stark differences between the guarantor supported loans offered by different lenders?

With the help of a guarantor you can borrow over 100% of the purchase price which will allow you to buy a home and pay for purchasing costs such as stamp duty at the same time and avoiding/minimising Mortgage Insurance costs.  The Guarantee can also be limited to the amount required to complete the purchase, thereby reducing the exposure/risk borne by the Guarantor.

Who can be your guarantor?

Most banks will only allow parental guarantees, i.e. a guarantee from the borrower’s parents. Some lenders can consider guarantees from immediate family members such as siblings, grandparents, spouses, de facto partners or adult children. This is because banks want to make sure that the guarantor has a strong relationship with you.

Generally if your guarantor is not part of your immediate family then you may be required to prove some savings as evidence that you are financially stable and the lender is also likely to restrict your loan to 100% of the purchase price.