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Does my parents going guarantor affect their ability to retire, or to borrow money themselves?

Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 3 min read

The 90 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.

Why retiring generally isn't the problem

When your parents go guarantor, they don't hand you any cash and they don't take on your repayments. The loan is in your name, you make the repayments, and their property sits behind it as extra security so the bank is comfortable lending you more than 80% without mortgage insurance.

So if retiring for them means stopping work and staying put in the family home, the guarantee doesn't really get in the way. There's nothing coming out of their pocket each month because of it. Where it gets more interesting is if their retirement plan involves selling, downsizing or drawing on that property, because the guarantee is still registered against it until you've got your loan to a point where they can come off.

Why it can affect their own borrowing

This is the sticking point. If your parents go to borrow money themselves, whether that's a new car loan, a top up on their own mortgage or an investment property, the bank looking at their application is going to see the guarantee. Typically it's a limited guarantee, so it's only for the amount needed to get your loan to 80% to begin with, not your whole loan.

Rule of thumb, that guaranteed amount can be treated as if it were an ongoing loan in their own financial position. Some banks may not care too much about it, others count it in full. A lot of lenders also put a ceiling on the total lending against the guarantor's property, adding up their own mortgage, the guarantee and any other guarantees they've given, and that ceiling often sits around 70% of what the place is worth. So a guarantee can eat into the equity they'd otherwise use for themselves.

How to keep it from biting

The cleanest thing is to have the conversation before anyone signs anything. If your parents have plans of their own in the next few years, like borrowing to renovate, helping another one of the kids, or buying an investment, we want to know that up front so the structure doesn't box them in.

The other lever is getting them off as quickly as possible. Once your loan is at 80% of the property's value, through extra repayments, the property going up in value, or both, we can look at releasing the guarantee. That's when their place is completely theirs again, and their borrowing goes back to normal.