Buying a family home is a significant milestone, but for many, saving for a 20% deposit can feel like a daunting hurdle. That’s where a family guarantee can make a world of difference. Recently, we worked with a client to help them achieve homeownership using their parents’ property as a guarantor—allowing them to bypass Lenders Mortgage Insurance (LMI) and save thousands in the process

Our client had been searching for the perfect family home but was concerned about the additional costs associated with LMI, which is typically required when a buyer has less than a 20% deposit. This is where the parents stepped in, offering to use their own property to secure the loan as guarantors.

Here’s how it worked:

The parents’ property was used to cover the equity shortfall, effectively acting as additional security for the bank. This enabled the client to borrow up to 100% of the purchase price without needing to pay LMI. By doing so, they avoided a potential LMI cost of tens of thousands of dollars—money that could instead be invested in their new home or saved for future needs.

The family guarantee not only saved the client money upfront but also reduced their ongoing loan repayments. Without the added burden of LMI, the total loan amount was lower, resulting in a more manageable financial commitment.

Additionally, we structured the loan to ensure the parents’ exposure was minimized. Only the necessary portion of their property’s equity was used as security, and we advised the client on strategies to release the guarantee as soon as possible. By making extra repayments and building equity in their home, the client could remove the guarantor arrangement within a few years.

This success story highlights how family support can be a powerful tool for first-home buyers. By leveraging the equity in their parents’ property, our client was able to enter the property market sooner, avoid unnecessary costs, and take a significant step toward financial independence.

If you’re considering buying a home and want to explore options like family guarantees, we’re here to help. Let’s discuss how we can tailor a solution to suit your needs and make your homeownership dream a reality.  Contact Us today to start the Process