According to KPMG’s latest Residential Property Outlook, house prices across Australia are expected to increase by 7.7% in 2026, despite ongoing speculation around interest  rates.

In the same report, it’s predicted that over the next 12 months property in major cities will soar. This includes Perth by 13%, Brisbane and Darwin by 10%, Adelaide 8%, Melbourne 7% and Sydney 6%. 

For many buyers the goal post seems to be moving further away. Saving for a deposit has become harder with pressure from cost of living and property prices booming faster than savings. 

But for many first home buyers, there is an option to fast-track entry to market. The home loan guarantor scheme is helps remove the roadblock for first home buyers looking to enter the property market. 

What is a guarantor home loan?

A home loan guarantor is when a person, typically a family member agrees to use the equity in their own property as additional security for a new loan. This can help home buyers avoid needing a large deposit and potentially save thousands in Lenders Mortgage Insurance (LMI). 

Guarantor home loans are a popular option for first home buyers. They provide a stronger pathway into the market sooner than they may have otherwise been able to. In some cases, a guarantor may also support the loan with both security and income, helping meet lending requirements and making it easier to purchase or invest in property earlier.

What a home loan guarantor can (and can’t) do

A home loan guarantor 

Will: 

• Help you buy property without the 20% deposit
• Potentially save thousands in LMI or avoid LMI all together
• Allow you to access lower interest rates

Will not: 

• Fix or ignore weak credit history
• Override poor spending habits
• Increase your borrowing capacity*

How does it work?

Guarantor loans are commonly used to help buyers enter the property market sooner, particularly when they may not have a full 20% deposit or when the buyer wants to avoid paying Lenders Mortgage Insurance (LMI). LMI is a cost paid when the buyer has less than a 20% deposit and is designed to protect the lender from defaults on the loan.

A guarantor then steps in as someone with security, such as equity in their home and agrees for a purchaser to use this property as additional security against a new loan for their purchase . 

In most cases:

• The guarantee is not the full loan, only a portion (up to 25%)
• It can be removed once the buyer builds enough equity, usually 20% 
• The guarantor is not making repayments unless a default occurs 

The red flag and recognising the risks 

While a guarantor loan can be a strategic way to fast track entry to market, it’s critical both the guarantor and borrower understand the risks and their responsibilities. 

For the guarantor:

• Their property is used as security 
• While the property is used as collateral, if repayments are not met by the buyer, the lender may recover the debt against the guarantor’s property

For the buyer:

• They are still 100% responsible for servicing the loan and managing repayments 
• Failure to meet repayments or poor financial management can impact both parties, including credit records 

Why more Australians are using guarantors in 2026

With property prices continuing to rise and cost of living pressures impacting savings, more buyers are looking for smarter ways to get into the market.

A guarantor strategy can:

• Cut years off your saving timeline
• Help you secure a property before prices increase further
• Reduce upfront costs significantly

Skyline Case Study

Sarah wants to buy an investment property but doesn’t have a 20% deposit. Her dad, Mark, agrees to act as a guarantor providing his property as security.

With the guarantee in place, Sarah was able to buy sooner and avoid paying Lenders Mortgage Insurance (LMI). Over the next 2 years, collectively she was able to pay down her loan and her property increased in value.

As a result, Sarah was in a position to remove her dad as guarantor and access additional equity via a refinance. Sarah moved forward independently because Mark assisted her to  get into the market without needing to contribute cash.

Residential lending is a core speciality for the Skyline Brokers team. We specialise in structuring strategic lending solutions, including guarantor loans to help buyers get into the property market sooner.

Book a quick call to explore your options.

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Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Please consult with a professional financial advisor before making any decisions related to SMSFs.

About Skyline Brokers

Skyline Brokers is an Australian boutique financing and mortgage broking firm. With a commitment to achieving clients’ goals and dreams, Skyline Brokers offers a comprehensive range of services to help clients achieve their unique financial goal.

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Frequently Asked Questions

Can I buy a house without a deposit in Australia?
This is subject to your individual circumstance. Typically, using a guarantor home loan you may be able to purchase a property without a full 20% deposit by using a family member’s property as security.

Do guarantor home loans avoid LMI?
In many cases, yes. A guarantor can help you avoid Lenders Mortgage Insurance (LMI), saving you thousands of dollars.

When can a guarantor be removed from the loan?
A guarantor can usually be removed once the borrower has built up at least 20% equity in the property.