A parental guarantee is where the guarantors are the parents of the borrower. This may be a security or serviceability guarantee however in most cases it is a security guarantee. Lenders prefer the parents of a borrower to be a guarantor for the following reasons:

• They have the closest relationship with the borrowers.
• They know if their son or daughter is good with money or not and are unlikely to guarantee the loan if they believe it to be a high risk.
• They know if their son or daughter is in a stable relationship or not and are unlikely to guarantee the home loan if they believe that the relationship may break down.
• The parents are usually in a much stronger financial position.

Over 60% of first home buyers obtain some help from their parents when buying a home. Whilst in the past this was often in the form of a gift for the children to use as a deposit there has been an increasing trend of parents preferring to guarantee their home loan instead.

Many lenders will only accept a guarantee if it is from the borrowers spouse or their parents. Please contact us for the full details of the loans that may be available to you.