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Does a guarantor need to qualify for the loan themselves, or is having equity enough?
Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 3 min read
The short answer
Generally, no. A lot of banks with their guarantor loans don't look at the guarantor's income at all. It's based on the equity available in their property, and whether the bank has enough there to fall back on if things go wrong.
The guarantor's role is the security side of the equation, not the repayment side. You as the applicant still have to show you can afford the loan on your own. That's why you could be retired as a guarantor and it can still work, as long as there's enough equity in the place.
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What the bank is actually testing
Think about why the guarantor is there in the first place. You stop making repayments, the bank sells your house, and there's still money owing after the sale. That's the gap the guarantee covers. The bank wants to know that if it ever came to that, there's enough equity sitting in the guarantor's property to be able to come after.
So the question the bank asks about a guarantor is mostly about the property, not the paycheque. What's it worth, what's already owing on it, and how much of it is being put up for your loan. Most guarantees are limited to the amount needed to get your loan down to 80%, so that's the figure the equity needs to cover.
Why income usually doesn't come into it
They don't need to show on paper that they can afford the loan you're applying for, because they're not the ones making the repayments. You are. Most of the lenders that offer guarantor loans assess the borrower on their own income and leave the guarantor's income out of the servicing completely.
That's what opens it up to parents who are retired or winding down. Plenty of guarantors are in their sixties with the house paid off or close to it, and that's actually a strong position from the bank's point of view, because there's a lot of clear equity sitting there.
Where equity isn't quite the whole story
Equity is the main test, but it isn't the only box. Most lenders still look at what the guarantor already owes against their place, because their own mortgage, any other guarantees and the new one all get added together, and a lot of lenders cap that total at around 70% of the property's value.
Some lenders go further. A few do a proper look at the guarantor's financial position, with a statement of their assets and debts or a check of their living expenses. Some won't accept a guarantor whose only income is a government payment, at least one wants extra sign-off once a guarantor is past 70, and they'll generally check the guarantor's credit file for defaults or court actions. None of that is a servicing test, but it's why I talk to the guarantors as well, not just you.
The honest bit: 'enough equity' depends on the lender
Lenders don't agree on how much of the guarantor's property can be put up, whether there can still be a mortgage on it, or how old is too old without extra approval. One lender's comfortable deal is another one's decline.
Guarantors also need to understand what they're signing. Most banks want them to get independent legal advice before the guarantee goes on, and that's a good thing. It protects them and it protects you.
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Next question
How much of my parents' equity can actually be used to support a guarantor loan?Most banks cap total lending against your parents' property at 70%, some work to 80%.
Related answers
The full guide: How to buy your first home The full guide: Guarantor home loans My parents still have a mortgage. Can they go guarantor without moving their loan to another bank? Does my parents going guarantor affect their ability to retire, or to borrow money themselves? If my parents go guarantor, what are they actually risking? When do my parents come off as guarantor, and can they guarantee more than one kid?Not your question? Book a call and ask it, or call 0437 189 939.