Can I act as the guarantor on my child’s home loan?

Answer

Yes, most likely. Some lenders allow a parent to provide extra security―as a guarantee, or pledge―for their child’s home loan repayments or to help them borrow the full amount they need to buy a property. 

This gives children the benefit of buying a property before they’ve saved the full deposit they’d otherwise need. Some lenders will allow parents to pay part of their child’s loan repayments.

The property to be purchased will normally be used as the main security for the loan and the guarantor’s property provides extra security. The extra security can generally be your own home or an investment property―the property may or may not have an existing mortgage in place. 

Some lenders offer to limit the guarantee a parent provides and the guarantee may be removable down the track once the child’s loan has been reduced below a certain level.

Before acting as a guarantor you need to make sure the property being purchased is a valid investment because you may have to repay the loan or meet any shortfall in the event of the property’s sale. And your own home would be at risk if for example, your child failed to meet their obligations under the loan agreement.

 

Important information

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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.

This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.