Family can help you buy in two main ways: a gifted deposit, or a guarantee secured by their property. We structure either one so the lender is satisfied, your family understands the commitment, and your loan is ready to restructure once you stand on your own.
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A gift is money your family hands over with no expectation of repayment. A guarantee is a promise backed by their property, with no cash changing hands. They solve different problems and carry different risks for your family.
| Gifted deposit | Family guarantee | |
|---|---|---|
| What family provides | Cash, given outright | Security over their property |
| Cash needed from family | Yes | Usually none |
| Family's ongoing risk | None once given | Liable up to the guaranteed amount |
| Effect on LMI | Reduces the LVR | Can avoid LMI, depending on the lender |
| How it ends | At settlement | When the lender releases the guarantee |
Many lenders accept a gift toward your deposit, provided it is genuinely a gift. Lenders commonly ask for:
Genuine savings rules vary. Many lenders want some of the deposit saved by you over time when you borrow at a higher LVR, and relax this at lower LVRs.
In our gifted deposit case study, a site manager bought a $1,175,000 home with around $149,000 in cash savings and a $280,000 unconditional gift, supported by a gift letter. At 68% LVR, proof of genuine savings was not required. He was approved for an $800,000 loan inside a 14-day finance clause.
With a family guarantee, a parent or close family member offers their property as extra security for part of your loan. Many lenders limit the guarantee to a set amount, often the portion of the loan above 80% of your property's value.
For example, on an illustrative $800,000 purchase with a $40,000 deposit, the loan would be $760,000. The amount above 80% of the value is $120,000, so a limited guarantee might be set at around that figure.
Lender rules on who can guarantee differ. Many accept parents, and some accept other close family. The guarantor generally needs enough equity in their own property, and some lenders also look at their income and age.
Lenders mortgage insurance protects the lender, not you, and is generally payable when you borrow more than 80% of the property's value. It is usually a one-off cost added at settlement.
A gift lowers your LVR by adding to the deposit. A family guarantee works differently: the extra security can bring the lender's overall exposure under its LMI threshold, so many lenders waive LMI even when your own deposit is small. Policies vary, and the guarantee needs to be large enough to cover the gap.
Our LVR calculator shows where your deposit sits against the 80% mark.
A guarantee is a serious commitment, and your family should understand it before they sign.
A limited guarantee for a fixed amount reduces the exposure compared with guaranteeing the whole loan. Many lenders require the guarantor to get independent legal advice before signing, and it is sensible either way. Your guarantor's lawyer advises them; we do not.
Some families combine the two: a smaller gift for costs, plus a limited guarantee to close the gap to 80%. The right mix depends on your income, your family's position and the lender's policy.
A site manager bought his next home for $1,175,000 while keeping his first property as an investment, with most of his deposit a $280,000 unconditional gift supported by a gift letter. We secured an $800,000 loan at 68% LVR inside a 14-day finance clause.
Read the Case Study →A guarantee is not meant to last the life of the loan. Once your loan falls to around 80% of your property's value, through repayments, price growth or both, you can usually apply to have it released.
We estimate your current LVR from your balance and a recent value.
Many lenders order their own valuation to confirm the figure.
The lender reassesses the loan and, if it meets policy, discharges the guarantee over your family's property.
If your current lender will not release it, refinancing to another lender is sometimes an option. Policies vary.
Tell us where you are and what you want to do next. We will tell you what the lending side looks like, including whether debt recycling fits later.
Request a Call With Alex →Debt recycling usually means borrowing against your home equity through a separate investment split. While a guarantee is in place, many lenders will not let you add new borrowing that relies on your family's security, and you probably would not want to.
The cleaner sequence is:
If you keep your first home as an investment when you upgrade, as in the case study, the existing loan's tax treatment generally follows what it was originally used for, not which property secures it. Our guide on keeping your first home as an investment covers the trade-offs. Your registered tax agent confirms the tax position.
We set the loan up from day one so that restructure is simple later, and our loan structure service covers how the splits work.
It is a home loan where a family member, usually a parent, offers their property as extra security for part of your loan. Many lenders limit the guarantee to a set amount. It can help you buy with a small deposit and, with many lenders, avoid lenders mortgage insurance.
Many lenders want a signed gift letter confirming the money is unconditional and does not need to be repaid, plus evidence of the funds reaching your account. Some also want the funds held for a period before you apply. Genuine savings requirements vary with the lender and your LVR.
If you cannot repay, the guarantor can be asked to pay up to the guaranteed amount, and their property may be at risk if they cannot. The guarantee can also reduce their own borrowing capacity. Your guarantor should get independent legal advice before signing.
Usually once your loan falls to around 80% of your property's value, through repayments, growth in value or both. You apply to the lender, which may order a valuation and reassess the loan before releasing the guarantee. Policies vary between lenders.
With many lenders, yes, provided the guarantee is large enough to bring the lender's exposure under its LMI threshold. LMI is generally payable when you borrow more than 80% of the property's value. Policies vary, so we check this before you apply.
It is usually simpler to wait. Many lenders will not allow new borrowing that relies on your family's security. Once the guarantee is released, the loan can be restructured into separate home and investment splits. Your financial adviser recommends whether to invest.
The lending and tax trade-offs when you upgrade.
Read more → SERVICEHow home owners turn equity into an investment loan.
Read more → CALCULATORSee where your deposit sits against the 80% mark.
Read more →
1. Arranged a loan when our small business situation made it difficult to qualify.
2. Met requirements to have funding available by a specified date.
3. Understood my needs to setup debt recycling to allow tax structuring.
4. Communicated well throughout.
I would use their services again.
Alex, Jess and the Kingfisher team were second to none and their process from start to finish was faultless. As a self-employed business owner, it can be difficult to obtain finance at the best of times. The Kingfisher team made this an easy and efficient proposition and their continued transparent and efficient communication ensured we were kept up to date at all times. Highly recommend them for your finance needs!
Alex and Jess dealt with our investment loan and provided a top tier service. They kept us up to date and communicated every step of the process making it a seamless and smooth experience! Awesome work team we will definitely be back for future loans!
Jess from Kingfisher was outstanding. I couldn't fault her communication, expertise or dedication to finding the best loan for our situation. The entire process was seamless from start to finish. We'll definitely be using Kingfisher again in the future. A top-tier organisation.
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