What exactly am I agreeing to as a guarantor?

Typically you're offering equity in your own property as additional security, which can let your child borrow with a smaller deposit and avoid lenders mortgage insurance. If they default and the security isn't enough to cover the debt, you can be liable for the shortfall.

Can I be released from the guarantee later?

Often yes, once your child has built enough equity or paid the loan down to a level the lender is comfortable with. This isn't automatic though, and it's worth confirming the specific conditions with the lender before agreeing to the guarantee.

Does being a guarantor affect my own borrowing capacity?

It can. The guarantee is usually treated as a contingent liability, which some lenders factor into your own future borrowing capacity even if your child is meeting all their repayments.

Are there alternatives to a full guarantee?

Yes. A gifted or loaned deposit, a smaller family pledge limited to a set amount rather than the full loan, and government-backed low deposit schemes are all worth discussing with a broker before committing to guarantee the entire loan.

Being a guarantor for your child's first home loan in Perth

By Nathan Ellis · Updated 2026-07-21

Helping an adult child buy their first home is one of the more significant financial decisions a parent can make, and it’s worth understanding fully before you sign anything. This is general information, not financial or legal advice, and every family’s situation and every lender’s terms differ, so get advice specific to your circumstances before agreeing to guarantee a loan. A broker experienced with first home buyers can walk through whether a guarantee is genuinely the right tool for your family’s situation.

Why families consider this arrangement

The most common reason is helping an adult child buy sooner, without waiting years to save a full deposit, or avoiding the added cost of lenders mortgage insurance. It can be a genuinely effective way to help, but it works best when it’s a deliberate decision made with full information rather than an emotional yes given quickly because it feels like the supportive thing to do. Taking a week to properly understand the exposure doesn’t make the help any less meaningful.

What a guarantor arrangement usually involves

A family guarantee typically lets your child borrow using equity in your property as extra security, on top of the property they’re buying. This can help them avoid needing a large deposit, and often avoids lenders mortgage insurance too. In exchange, you’re taking on real financial exposure: if your child can’t meet their repayments and the sale of their property doesn’t cover the debt, you could be liable for the shortfall, up to the limit set in the guarantee.

A parent and adult child reviewing paperwork together about a family home loan guarantee

Talking it through as a family first

Before any lender paperwork, it’s worth having an honest conversation between everyone involved about what happens if things don’t go to plan. What if your child loses their job for a period? What if they want to sell sooner than expected? These conversations can feel uncomfortable, but having them upfront, while everyone is calm and nothing has actually gone wrong, tends to prevent far more difficult conversations later.

Questions worth asking before you agree

Is the guarantee limited to a specific amount, or does it cover the entire loan? A limited guarantee caps your exposure and is generally the safer structure where a lender offers it.
What are the conditions for being released from the guarantee? Understand what needs to happen, usually equity or repayment thresholds, before you’re no longer on the hook.
How does this affect my own future borrowing plans? If you’re considering your own refinance or purchase down the track, ask how the guarantee is treated in that assessment.
What happens if my child’s circumstances change? Job loss, relationship breakdown, or missed payments are uncomfortable to think through in advance, but worth discussing openly before you commit.

Alternatives worth considering first

Option	How it works	Best suited to
Full guarantee	Parent’s equity secures the full loan	Situations where a limited guarantee isn’t offered or enough
Limited guarantee	Parent’s exposure is capped at a set amount	Most family guarantee situations, where offered
Gifted or loaned deposit	Cash contribution rather than a security arrangement	Parents who’d rather not tie up property equity
Government low deposit scheme	No family guarantee needed, subject to eligibility	First home buyers who qualify without family help

For the full range of grants and schemes available to first home buyers in WA, see our guide on first home buyer grants and schemes.

Why this decision deserves its own conversation with a broker

Reviewers who’ve helped adult children into a first home through a guarantee often mention how much clearer the decision became once someone explained the exit conditions and the actual financial exposure in plain terms, rather than working through legal documents alone. A broker experienced in guarantor loans can walk through the specific numbers for your situation and compare a full guarantee against a limited one or an alternative entirely.

Before you sign anything

Get independent legal advice on the guarantee documents themselves, separate from the broker arranging the loan, since you’re taking on a real legal obligation. This is general information about how family guarantees commonly work, not advice on your specific situation, and terms vary meaningfully between lenders. Browse Perth mortgage brokers who work with guarantor arrangements, and see our scoring methodology for how listings are ranked.

FAQ

What exactly am I agreeing to as a guarantor?: Typically you're offering equity in your own property as additional security, which can let your child borrow with a smaller deposit and avoid lenders mortgage insurance. If they default and the security isn't enough to cover the debt, you can be liable for the shortfall.
Can I be released from the guarantee later?: Often yes, once your child has built enough equity or paid the loan down to a level the lender is comfortable with. This isn't automatic though, and it's worth confirming the specific conditions with the lender before agreeing to the guarantee.
Does being a guarantor affect my own borrowing capacity?: It can. The guarantee is usually treated as a contingent liability, which some lenders factor into your own future borrowing capacity even if your child is meeting all their repayments.
Are there alternatives to a full guarantee?: Yes. A gifted or loaned deposit, a smaller family pledge limited to a set amount rather than the full loan, and government-backed low deposit schemes are all worth discussing with a broker before committing to guarantee the entire loan.