When mum and dad guarantee your loan, they're not just signing a form. They're putting their own home on the line.
That's why the structure of a guarantee matters as much as the decision to give one.
A lot of guarantors assume they're backing "the loan." In reality, a guarantee can be limited to only the portion of the loan that needs the extra security to get your purchase over the line. But here's the catch: banks will often take the guarantee in full if they can. It usually has to be stipulated deliberately during the loan process.
So before anyone signs anything, we make sure each parent or guarantor understands exactly what they're committing to. We almost always recommend they get their own independent legal and financial advice. Not as a formality… so they genuinely understand the risk they're carrying.
There's also a common misconception worth clearing up: that a guarantor lets you borrow more.
Yes and no.
There are two parts to every scenario.
The first is your borrowing capacity: how much you can afford to repay, based on your income against your expenses. Mum and dad have nothing to do with that part.
The second is your funding position: your deposit, and where a guarantor can step in. That's the piece a guarantee actually helps with.
Knowing which lever you're actually pulling changes the whole conversation.
If you're weighing up a family guarantee, we take the time to walk through the detail with both sides — you as the borrower, and them as the guarantor — so everyone goes in with clear eyes.
This is one worth getting right early. Happy to talk it through.
