Help your child buy their first home without spending a cent!
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Help your child buy their first home without spending a cent!

A family guarantee home loan (also called a Family Pledge) can be just the right solution to help first home buyers struggling to save a house deposit to get into the property market. It is also a great solution for parents looking to give their child a helping hand to get out of the family nest!

There are many advantages with this type of home loan for all family members involved.

For the parents, it can be a way they can help their adult children enter the property market without having to physically gift them any money, but instead offering a portion of their own home equity for a limited time frame as a way to guarantee the home loan.

For the applicants as well as no longer needing a deposit, they will also save thousands of dollars by not having to pay Lenders Mortgage Insurance (LMI) over the life of the loan.

An example of how it works…

Here’s an example of a typical Lenders Mortgage Insured home loan versus a Family Guarantee home loan for the purchase of a new home with a total cost of $400,000.

Mortgage Insured Loan Family Guarantee Loan
Typical minimum deposit required: $35,000 Nil
Estimated LMI premium added to loan: $10,000 Nil
Estimated EXTRA interest over 30 years due to LMI: $9,326 Nil

Using this example, you could save your child the original $10,000 LMI premium plus the $9,326 extra interest on the premium. A total saving for your child of $19,326 in unnecessary fees PLUS they can secure the loan without $35,000 or more in saved deposit!

first home family guarantee home loan

By entering into a family guarantee home loan you can help your child afford to build their first home and save thousands, all without spending a cent!

Family Guarantee Loans

There are a number of different home loan lenders available each with their own specific requirements to meet in order to qualify.

Our recommended broker, Rob Frew from Salt & Pepper Home Loans, has extensive experience with family guarantee home loans and he can advise you on any specific qualifying requirements for the various options available as well as answer any questions or concerns you or your family may have.


Q: I’ve heard that I won’t be eligible for the First Home Owners Grant (FHOG) if I get a family guarantee loan, is this true?

A: No, this is incorrect. The family guarantee home loans our recommended home loan broker arranges for clients meets Office of State Revenue guidelines and will not jeopardize your First Home Owners Grant.

Q: Will I really need no deposit at all to buy my new home with a family guarantee, what about money for solicitor fees etc.?

A: No deposit will be required at all with a family guarantee home loan. You will be able to borrow 100% of the total home cost as well as funds to cover standard purchase costs such as solicitor fees etc. if required.

Our recommended home loan broker can advise you on the most suitable way to structure your family guarantee home loan for your own individual circumstances.

Q: My parents have advised they would be happy to help in this way but they are not sure if they have enough equity in their home, how do we find out if this option may be suitable for us?

A: Our recommended home loan broker will be able to quickly determine for you if a family guarantee will be suitable for your circumstances. Get in touch with Rob Frew for an obligation free assessment on (07) 4795 0977.

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