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Saving a deposit while paying rent is one of the more frustrating parts of trying to buy property in Australia. By the time you get close, prices have moved, and the goalposts feel further away than ever. A guarantor loan is one way to overcome that barrier, and for many first home buyers, it is the difference between buying now and waiting another three to five years.
At Zella Money, we help clients understand whether a guarantor home loan is the right fit for their situation, and if it is, we work through the details carefully so everyone involved knows exactly what they are signing up for.
What is a guarantor loan?
A guarantor loan is a home loan where a third party, usually a parent or close family member, uses the equity in their own property as additional security for your loan. This is sometimes called a family guarantee, a parental equity arrangement, or a security guarantee. Rather than contributing cash, your guarantor is essentially offering their property as a backstop for the lender.
This arrangement can allow you to borrow with little or no deposit, and in many cases it means you can avoid LMI, which is Lenders Mortgage Insurance. LMI is a cost that lenders typically require when a borrower has less than a 20 per cent deposit. It protects the lender, not you, and it can add tens of thousands of dollars to your loan. A no deposit guarantor loan, structured correctly, could remove that cost entirely.
Limited guarantee versus unlimited guarantee
Not all guarantor arrangements are the same. A limited guarantee means your guarantor's liability is capped at a specific loan amount, usually just enough to bring your loan to value ratio (LVR) down to 80 per cent. This is generally considered the more conservative and preferred structure, because it limits the exposure for your guarantor. An unlimited guarantee means the guarantor is liable for the full loan amount, which carries significantly more risk.
At Zella Money, we always talk through the difference between a limited guarantee and an unlimited guarantee with our clients, because understanding guarantor obligations and guarantor responsibilities upfront is non-negotiable. Your guarantor needs to understand what they are agreeing to, and we strongly encourage them to seek independent legal advice before signing anything. Guarantor legal advice is not optional in our view, it is essential.
Who can be a guarantor?
Most lenders require a guarantor to be a close family member, typically a parent. Some lenders will consider siblings or other relatives, but the criteria vary. Guarantor age limits also apply, as lenders want to be confident the guarantor has a clear exit strategy before they retire. If your parents are in their late fifties or sixties, some lenders will want to see a plan for how the guarantee will be removed before they stop working.
The guarantor's own financial position matters too. Lenders will assess the guarantor's income, existing debts, and the equity available in their property. Guarantor income assessment is part of the approval process, and it is worth understanding that your guarantor's ability to service the debt, if you were ever unable to, is something lenders look at closely.
Co-borrower versus guarantor
These two arrangements are often confused, but they are quite different. A co-borrower is named on the loan and is equally responsible for repayments from day one. A guarantor is not on the loan itself, but their property is used as security. If you default, the lender can pursue the guarantor. Understanding the difference between a co-borrower vs guarantor matters because it affects your guarantor's credit file, their borrowing capacity, and their long-term financial position.
The guarantor exit strategy
One of the most important conversations we have at Zella Money is about the guarantor exit strategy. A guarantee is not meant to be permanent. Once you have built enough equity in your property, either through repayments or capital growth, you can apply to release the guarantor from the loan. This is sometimes called a guarantor refinance, and it involves the lender reassessing your loan on its own merits without the additional security.
Knowing how and when you can remove guarantor obligations gives everyone involved a clearer picture of what the arrangement looks like over time. Most clients aim to release their guarantor within three to five years, though this depends on property values and how much of the loan has been repaid.
If you are a first home buyer thinking about whether family assistance could help you into the market sooner, or if you are a parent wondering what being a guarantor actually means for you, Zella Money is here to walk through it with you. We access home loan options from banks and lenders across Australia, and we take the time to find a structure that works for your whole family, not just the borrower. Whether you are weighing up a variable interest rate or a fixed interest rate, or simply trying to understand how parental equity could help you achieve home ownership, we are the kind of people who will sit down and talk it through properly.
Getting a home loan can feel overwhelming. It doesn't have to be. At Zella Money, we've built a process that keeps you informed, supported, and confident at every step. Here's how we work together.
Let's Have a Chat: Everything starts with a conversation. We take the time to understand where you are right now, where you want to go, and what matters most to you. No pressure, no jargon. Just an honest discussion about your situation and your goals.
We Dig Into the Detail: Once we know what you're working towards, we take a closer look at your finances. Income, expenses, savings, existing debts. We look at the full picture so we can give you advice that's actually relevant to your life, not just a generic answer.
We Research the Market: With a clear picture of your situation, we search across a wide panel of lenders to find options that genuinely suit you. We're not tied to one bank or one product. Our job is to find the right fit, not the easiest one.
We Walk You Through Your Options: We present a shortlist of suitable loan options and explain each one in plain language. Rates, fees, features, flexibility. We cover it all so you can make a decision you feel good about. No hard sell, ever.
We Handle the Application: Once you've chosen the loan that works for you, we take care of the paperwork. We prepare and lodge your application, liaise with the lender, and keep things moving. You don't need to chase anyone.
We Keep You in the Loop: From application through to approval, we stay in regular contact. You'll always know where things stand. If the lender needs anything extra, we handle it quickly and let you know what's happening and why.
Settlement and Beyond: Approved and settled? We're still here. We check in after settlement to make sure everything's running smoothly, and we stay available as your circumstances change. One loan is just the beginning.
Ready to talk to the team? We're excited to meet you! Shoot though an enquiry and we'll get back to you ASAP!
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We used Jaclyn the Senior Finance Broker to buy our first home and she was amazing! She is so knowledgeable, made us feel valued and turned our dream into a reality. Can not recommend her enough! Shout out to Sal as well the Settlements Manager who helped make settlement nice and simple.
Chris Fallon
I cannot recommend Zella highly enough! Charlotte and the wider Zella team were with us every step of the way! They truly had our backs in securing the best home loan for our family. Prompt, informative and easy to deal with! Thank you so much for all your hard work!! xx
Olivia Jolliffe
I had a great experience with Zella from start to finish. The team was friendly and made our refinance super easy. Highly recommend!
Casey Sharrock
Huge thanks to Tara and her team! Highly recommend !
Maddie B
Bought my first home through Zella and so so glad I did! Georgia was extremely helpful from the start and patient with answering all of my stupid questions. Thank you again for everything!
Christine Untario
I really appreciated working with the team. They were really efficient, no question went unanswered and they were lovely to work with. I felt in good hands!
Jane Eldershaw
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For most standard lending appointments, no. We're paid by the lender once your loan settles. In rare cases where applications are highly complex, a fee may apply, but we'll always discuss and disclose this with you upfront.
Yes. We use bank-grade security systems and are fully compliant with Australian privacy regulations. Your information is treated with the highest level of care and confidentiality.
Absolutely. We assist clients across Australia and have a thorough understanding of different state and territory regulations, grants and incentives.
We keep communication clear and simple. Your broker will be available via email and phone, and we manage documentation securely through our electronic portal. Your initial meeting can be held over the phone or by video call, depending on your preference. We're always just a message away if you need support.
To get started, we'll need documents such as identification, proof of income (like payslips or tax returns), details of your assets and liabilities, and statements for any existing loans or credit facilities. Your broker will give you a personalised checklist so you always know what's needed.
Your borrowing capacity depends on factors like your income, expenses, existing debts, credit history and the policies of individual lenders. We'll work with you to assess your position and give you a clear understanding of what's achievable.
Yes. Our brokers stay across all available incentives, including first home buyer grants, stamp duty concessions and guarantee schemes. If you're eligible, we'll help you understand how to apply and make the most of these opportunities.
Absolutely. We specialise in guiding first-home buyers through the process with tailored advice, clear communication and plenty of support along the way.
Banks offer their own products. We offer you options. As your broker, we take the time to understand your goals and financial circumstances before searching across a broad panel of lenders to find solutions that genuinely suit you. We also stay across the latest policies, grants and niche lender options that could make a real difference to your outcome.
We conduct a credit check early in the process to help us best assist you. Your score is safe with us. If you have any concerns about your credit history, please speak with your broker — we're here to support you.
Pre-approvals generally last between three and six months, depending on the lender. We'll guide you through the timeline and help you refresh your approval if your property search takes a little longer than expected.
Once your loan is formally approved, we'll guide you through the settlement process. We work closely with your solicitor or conveyancer to ensure all requirements are met and everything runs smoothly right through to settlement day.
Definitely. We understand the nuances of self-employed income and have extensive experience presenting applications for business owners in a way that resonates with lenders.
No. In addition to home loans, we also assist with commercial lending, investment loans, refinancing and asset finance. Whatever your finance goals, we're ready to support you.
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