Jason and Sarah want to buy their first home for $380,000 but do not have the required 5% deposit. With a family guarantee loan, Sarah's parents can pledge $80,000 secured against their own home to help Jason and Sarah obtain a loan for the full purchase price plus costs of $384,000. This allows Jason and Sarah to avoid paying mortgage insurance and to borrow more than the bank would normally allow based on the property value alone. If Jason and Sarah default on the loan, Sarah's parents would only be responsible for the $80,000 portion secured by their guarantee.

1. L o a n W i z e – W i z e U p t o y o u r B e s t F i n a n c i a l D e c i s i o n Page 1
Home Loans
Investment Loans
Business Loans
Commercial Property Loans
Asset Finance
Fact Sheet: Family Pledge / Support
What is it?
We all know how hard it is to save for your deposit for your first home, especially while you are also
paying rent. With a family guarantee loan, you can borrow the full amount of the purchase price,
plus additional funds to cover the purchase costs associated with buying a home such as Stamp
Duty and legal costs, depending on how much your family member is willing to guarantee.
If they are happy to, and have enough equity available in their own property, you may even be able
to avoid paying any mortgage insurance as well.
The Benefits of Family Pledge - For Borrowers:
1. Help you to reduce or avoid Lenders Mortgage Insurance, saving you money when
you need it the most.
2. Maximise the amount you can borrow – up to 100% of the purchase price plus costs
associated with the purchase.
For Guarantors:
1. Allow you to nominate a specific amount that your guarantee is limited to, rather than
a guarantee for the entire loan.
At Loan Wize, we are passionate about property, and we know that buying your first home can be
the most daunting decision of your life. We want to help you make the process as easy as possible.
How Does it Work?
Jason and Sarah are looking at buying their first home and have good income but have been
unable to save their required 5% deposit funds.
Sarah’s parents own their home and are keen to help Jason and Sarah into their new home, as they
realise that buying a property is a far better option for them that getting stuck in the rental cycle.
Details:
Purchase Price of new home $380,000
Total costs for purchase $4,000
Total Loan Required $384,000
• The new property is valued at $380,000, and therefore the bank will lend 80% against this
property
• This would result in a loan of $304,000
• Sarah’s Parents offer a family pledge of $80,000 secured by their home, and their
guarantee is limited to $80,000.
• Jason and Sarah are able to borrow all of the purchase price plus costs without any
genuine savings, and they do not need to pay any mortgage insurance costs on the loan,
saving them thousands.

2. L o a n W i z e – W i z e U
Home Loans
Investment Loans
Business Loans
Commercial Property Loans
Asset Finance
Loan Amount less Guarantee amount ($384,000
Sarah’s Parents exposure is limited to $80,000, and should Jason and Sarah find themselves in a
position where they may not be able to meet their repayments, Sarah’s parents would only be
responsible for the portion of the loan that is se
Who can be a guarantor?
Most banks will only allow parental guarantees, i.e. a guarantee from the borrower’s parents. Some
lenders can consider guarantees from immediate family members such as siblings, grandparents,
spouses, de facto partners or adult children. This is because banks want to make sure that the
guarantor has a strong relationship with you.
NB: The Guarantor
will not accept a guaran
financially if the borrower was to default on the loan.
While this product may not be suitable for everyone, it does provide significant benefits to those
seeking to purchase a property wi
to assist them into their new home.
At Loan Wize
needs are as unique and as individual as they are. We
solutions to your individual circumstances.
If you are not sure whether a family pledge option is right for you, call us and discuss it with us first.
We will also be happy to spend some time discussing it with y
they fully understand their obligations under the proposed loan. Guarantors are typically required to
obtain independent legal advice (at their own cost as well).
So if you think the Family Pledge may be right for you,
Wize Profess
U p t o y o u r B e s t F i n a n c i a l D e c i
Total Loan Amount $384,000 / Loan to Value Ratio
Loan to value ratio is:
Loan Amount less Guarantee amount ($384,000-$80,000 = $304,000) / Property value ($380,000)
Therefore LVR = 80%
Sarah’s Parents exposure is limited to $80,000, and should Jason and Sarah find themselves in a
position where they may not be able to meet their repayments, Sarah’s parents would only be
responsible for the portion of the loan that is secured by their limited guarantee.
Who can be a guarantor?
Most banks will only allow parental guarantees, i.e. a guarantee from the borrower’s parents. Some
lenders can consider guarantees from immediate family members such as siblings, grandparents,
ses, de facto partners or adult children. This is because banks want to make sure that the
guarantor has a strong relationship with you.
NB: The Guarantor does need to be acceptable to the bank. ie generally this means that they
will not accept a guarantor from someone who would be placed in a very difficult position
financially if the borrower was to default on the loan.
While this product may not be suitable for everyone, it does provide significant benefits to those
seeking to purchase a property with little or no deposit, where their direct family members would like
to assist them into their new home.
Loan Wize, we understand that there is no one size fits all home loan, and that everybody’s
needs are as unique and as individual as they are. We listen to you and tailor our recommended
solutions to your individual circumstances.
If you are not sure whether a family pledge option is right for you, call us and discuss it with us first.
We will also be happy to spend some time discussing it with your family member as well, so that
they fully understand their obligations under the proposed loan. Guarantors are typically required to
obtain independent legal advice (at their own cost as well).
So if you think the Family Pledge may be right for you, call and discuss your situation with a
Professional Lending Specialist today!
e c i s i o n Page 2
Total Loan Amount $384,000 / Loan to Value Ratio (LVR) 80%
$80,000 = $304,000) / Property value ($380,000)
Sarah’s Parents exposure is limited to $80,000, and should Jason and Sarah find themselves in a
position where they may not be able to meet their repayments, Sarah’s parents would only be
cured by their limited guarantee.
Most banks will only allow parental guarantees, i.e. a guarantee from the borrower’s parents. Some
lenders can consider guarantees from immediate family members such as siblings, grandparents,
ses, de facto partners or adult children. This is because banks want to make sure that the
need to be acceptable to the bank. ie generally this means that they
tor from someone who would be placed in a very difficult position
While this product may not be suitable for everyone, it does provide significant benefits to those
th little or no deposit, where their direct family members would like
, we understand that there is no one size fits all home loan, and that everybody’s
listen to you and tailor our recommended
If you are not sure whether a family pledge option is right for you, call us and discuss it with us first.
our family member as well, so that
they fully understand their obligations under the proposed loan. Guarantors are typically required to
discuss your situation with a Loan