PLEASE NOTE:

The following mortgage offers are not home loans specifically guarantor home loans. We’ve shown you these home loans to help you compare what’s available in the Australian mortgage market, and make a more informed financial decision. 
To compare home loans that you can apply for with the help of a guarantor, visit the guarantor home loans page on RateCity.  

Find and compare low income and guarantor home loans

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Advertised Rate
Comparison Rate*
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Monthly Repayment
Features
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2.19%

Variable

2.22%

Yard

$1,299

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.86

/ 5
More details

2.59%

Variable

2.59%

Reduce Home Loans

$1,359

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.45

/ 5
View Now
More details

2.68%

Variable

2.69%

Greater Bank

$1,373

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.19

/ 5
View Now
More details

2.68%

Variable

2.69%

Suncorp Bank

$1,373

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.56

/ 5
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More details

2.69%

Variable

2.69%

NAB

$1,375

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.38

/ 5
More details

2.89%

Variable

2.89%

Reduce Home Loans

$1,406

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.58

/ 5
View Now
More details

3.02%

Variable

3.05%

Yard

$1,426

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

2.36

/ 5
More details

2.29%

Fixed - 2 years

3.28%

Suncorp Bank

$1,314

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

2.93

/ 5
View Now
More details

2.79%

Fixed - 5 years

3.33%

Greater Bank

$1,390

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

2.80

/ 5
View Now
More details

2.24%

Fixed - 2 years

3.45%

Mystery Deal

$1,307

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.14

/ 5
More details

1.99%

Fixed - 1 year

3.52%

Greater Bank

$1,270

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

1.65

/ 5
View Now
More details

3.29%

Variable

3.71%

NAB

$823

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

1.60

/ 5
More details

2.79%

Fixed - 5 years

3.87%

NAB

$1,390

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

2.82

/ 5
More details

Learn more about home loans

What are guaranteed home loans?

A guaranteed home loan is a mortgage in which a ‘guarantor’ promises to make the repayments if the borrower fails to do so. As a general rule, the guarantor will have a good credit history and will have to put up their home as a form of security.

Guarantor mortgages are a helpful option for applicants who can’t secure a regular loan, because of one or several of these reasons:

  • Haven’t saved a large enough deposit
  • Don’t have a large enough income
  • Don’t have a reliable employment history
  • Have a bad credit history

Guarantors are often the applicant’s parents. However, some lenders will also accept siblings and grandparents as guarantors.

Successful applicants who need to borrow more than 80 per cent of a home’s value might want to consider a guarantor to help cover the 20 per cent deposit to avoid costly lender’s mortgage insurance (LMI) payments. The borrower can then take on the remaining 80 per cent of the loan without a guarantor.

Who offers guaranteed home loans?

Many banks, credit unions, building societies and non-bank lenders offer guaranteed home loans as this gives them added security on the loan.

Home loan lenders have a range of eligibility criteria for a loan. Having a low income does not automatically disqualify an applicant. Additionally, home loans for bad credit are possible for a borrower who secures a guarantor.

Guarantor loans are a helpful option for Australians looking to buy their first home, and there are many lenders willing to assist. Still, it is harder to get a guaranteed home loan than a regular home loan.

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How do you compare guaranteed home loans?

Using RateCity’s home loans comparison tool, here are some of the things borrowers should consider when applying for a guaranteed home loan:

  • Advertised interest rate – this is the interest rate that will be charged on the loan, and will be either variable or fixed
  • Comparison rate – this rate gives a more realistic picture of the true cost of the loan as it combines the advertised interest rate with most fees
  • Monthly repayment – how much the borrower is expected to pay per month
  • Total repayments – how much the borrower can expect to pay over the life of the loan
  • Minimum deposit – the percentage of the purchase price that the borrower needs to provide to qualify for a home loan
  • Loan term – the amount of time the borrower has to repay the loan
  • Loan fees – the upfront and ongoing fees that the borrower must pay during the life of the loan

How can you improve your chances of being approved for guaranteed home loans?

Borrowers can improve their chances of being approved for guaranteed home loans by demonstrating to the lender that they are a ‘safe bet’.

The more risky a loan application seems, the less likely it will be approved by a lender, so borrowers should aim to make themselves look as responsible as possible.

Here are six ways to improve your chance of being approved for a mortgage:

  1. A higher deposit is better than a lower deposit
  2. A higher income is better than a lower income
  3. A higher savings rate is better than a lower savings rate
  4. A longer tenure in your current job is better than a shorter tenure
  5. A good credit history is better than a bad credit history
  6. A lower credit limit on your credit cards is better than a higher credit limit

Any steps you can take to improve in some or all of those categories will help your chances of qualifying for a guaranteed home loan.

Another way to improve your chances is to pick the best possible guarantor. The guarantor will be required to pay the home loan if you default, so the lender will also need to be convinced that they are a responsible party.

Lenders will look more favourably on a guarantor with a stronger financial position and a better credit history that a guarantor with a weaker financial position and a worse credit history.

Case study

Mary and Luke are in the early stages of their careers after graduating from university. They have found their ideal first home, but don’t meet the financial requirements needed to qualify for a standard mortgage.

Mary’s parents agree to help them as a guarantor, which allows them to successfully apply for a loan for a property valued at $750,000. They put down a deposit of 5 per cent ($37,500) and borrow the remaining 95 per cent of the value of the property.

Thanks to their guarantors, Mary and Luke aren’t asked to pay lender’s mortgage insurance (LMI) on their loan, saving them about $21,000.

How do you take out guaranteed home loans?

Borrowers can apply for a guaranteed home loan by using a comparison website, going through a mortgage broker or going direct-to-lender.

Both the borrower and the guarantor will need to provide proof of identity, income, savings and employment.

The guarantor will also need to provide documentation for the property they’re securing against the guaranteed home loan.

Borrowers and their guarantors should be honest in the application to avoid any disruption to the application process.

What are the pros and cons of guaranteed home loans?

As with any kind of financial product, guaranteed home loans have their upsides and downsides.

The pros of guaranteed home loans include:

  • Enter the market sooner
  • Potentially avoid LMI
  • Get a lower interest rate
  • Buy a more expensive home

The cons of guaranteed home loans include:

  • Jeopardise the borrower-guarantor relationship
  • Potentially pay LMI
  • Take on a larger-than-average mortgage

What are some alternatives to guaranteed home loans?

Instead of a guaranteed home loan, parents can give their children a cash gift that they can use as a deposit. Most banks will want evidence that the borrower is not frivolous with their money. It is a good idea for the borrower to leave this money in their account for three to six months to display responsibility.

Parents could purchase the house with their children by buying in partnership. In this instance, the parents and children share the responsibility of repaying the home loan.

A parent assist home loan makes it possible for people to borrow up to 100 per cent of the home loan from their parents. In this scenario, the borrower can pay less interest than they would to a bank.

A home loan with bad credit has a better chance of being approved if the borrower has a guarantor.

Frequently asked questions

What if I can't pay off my guaranteed home loan?

If you can’t pay off your guaranteed home loan, your lender might chase your guarantor for the money.

A guaranteed home loan is a legally binding agreement in which the guarantor assumes overall responsibility for the mortgage. So if the borrower falls behind on their mortgage, the lender might insist that the guarantor cover the repayments. If the guarantor fails to do so, the lender might seize the guarantor’s security (which is often the family home) so it can recoup its money.

How do guaranteed home loans work?

A guaranteed home loan involves a guarantor (often a parent) promising to pay off a mortgage if the principal borrower (often the child) fails to do so. The guarantor will also have to provide security, which is often the family home.

The principal borrower will usually be someone struggling to find the money to enter the property market. By partnering with a guarantor, the borrower increases their financial power and becomes less of a risk in the eyes of lenders. As a result, the borrower may:

  • Qualify for a mortgage that they would have otherwise been denied
  • Not be required to pay lender’s mortgage insurance (LMI)
  • Be charged a lower interest rate
  • Be charged less in fees

Are bad credit home loans dangerous?

Bad credit home loans can be dangerous if the borrower signs up for a loan they’ll struggle to repay. This might occur if the borrower takes out a mortgage at the limit of their financial capacity, especially if they have some combination of a low income, an insecure job and poor savings habits.

Bad credit home loans can also be dangerous if the borrower buys a home in a stagnant or falling market – because if the home has to be sold, they might be left with ‘negative equity’ (where the home is worth less than the mortgage).

That said, bad credit home loans can work out well if the borrower is able to repay the mortgage – for example, if they borrow conservatively, have a decent income, a secure job and good savings habits. Another good sign is if the borrower buys a property in a market that is likely to rise over the long term.

How can I get a home loan with bad credit?

If you want to get a home loan with bad credit, you need to convince a lender that your problems are behind you and that you will, indeed, be able to repay a mortgage.

One step you might want to take is to visit a mortgage broker who specialises in bad credit home loans (also known as ‘non-conforming home loans’ or ‘sub-prime home loans’). An experienced broker will know which lenders to approach, and how to plead your case with each of them.

Two points to bear in mind are:

  • Many home loan lenders don’t provide bad credit mortgages
  • Each lender has its own policies, and therefore favours different things

If you’d prefer to directly approach the lender yourself, you’re more likely to find success with smaller non-bank lenders that specialise in bad credit home loans (as opposed to bigger banks that prefer ‘vanilla’ mortgages). That’s because these smaller lenders are more likely to treat you as a unique individual rather than judge you according to a one-size-fits-all policy.

Lenders try to minimise their risk, so if you want to get a home loan with bad credit, you need to do everything you can to convince lenders that you’re safer than your credit history might suggest. If possible, provide paperwork that shows:

  • You have a secure job
  • You have a steady income
  • You’ve been reducing your debts
  • You’ve been increasing your savings

How much can I borrow with a guaranteed home loan?

Some lenders will allow you to borrow 100 per cent of the value of the property with a guaranteed home loan. For that to happen, the lender would have to feel confident in your ability to pay off the mortgage and in the security provided by your guarantor.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

What is a bad credit home loan?

A bad credit home loan is a mortgage for people with a low credit score. Lenders regard bad credit borrowers as riskier than ‘vanilla’ borrowers, so they tend to charge higher interest rates for bad credit home loans.

If you want a bad credit home loan, you’re more likely to get approved by a small non-bank lender than by a big four bank or another mainstream lender.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

What is a debt service ratio?

A method of gauging a borrower’s home loan serviceability (ability to afford home loan repayments), the debt service ratio (DSR) is the fraction of an applicant’s income that will need to go towards paying back a loan. The DSR is typically expressed as a percentage, and lenders may decline loans to borrowers with too high a DSR (often over 30 per cent).

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

I can't pick a loan. Should I apply to multiple lenders?

Applying for home loans with multiple lenders at once can affect your credit history, as multiple loan applications in short succession can make you look like a risky borrower. Comparing home loans from different lenders, assessing their features and benefits, and making one application to a preferred lender may help to improve your chances of success

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

What is a guarantor?

A guarantor is someone who provides a legally binding promise that they will pay off a mortgage if the principal borrower fails to do so.

Often, guarantors are parents in a solid financial position, while the principal borrower is a child in a weaker financial position who is struggling to enter the property market.

Lenders usually regard borrowers as less risky when they have a guarantor – and therefore may charge lower interest rates or even approve mortgages they would have otherwise rejected.

However, if the borrower falls behind on their repayments, the lender might chase the guarantor for payment. In some circumstances, the lender might even seize and sell the guarantor’s property to recoup their money.

What is breach of contract?

A failure to follow all or part of a contract or breaking the conditions of a contract without any legal excuse. A breach of contract can be material, minor, actual or anticipatory, depending on the severity of the breaches and their material impact.

What happens when you default on your mortgage?

A mortgage default occurs when you are 90 days or more behind on your mortgage repayments. Late repayments will often incur a late fee on top of the amount owed which will continue to gather interest along with the remaining principal amount.

If you do default on a mortgage repayment you should try and catch up in next month’s payment. If this isn’t possible, and missing payments is going to become a regular issue, you need to contact your lender as soon as possible to organise an alternative payment schedule and discuss further options.

You may also want to talk to a financial counsellor. 

How often is your data updated?

We work closely with lenders to get updates as quick as possible, with updates made the same day wherever possible.

Mortgage Calculator, Repayment Type

Will you pay off the amount you borrowed + interest or just the interest for a period?

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Why was Real Time Ratings developed?

Real Time RatingsTM was developed to save people time and money. A home loan is one of the biggest financial decisions you will ever make – and one of the most complicated. Real Time RatingsTM is designed to help you find the right loan. Until now, there has been no place borrowers can benchmark the latest rates and offers when they hit the market. Rates change all the time now and new offers hit the market almost daily, we saw the need for a way to compare these new deals against the rest of the market and make a more informed decision.