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How much of my parents' equity can actually be used to support a guarantor loan?
Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 3 min read
The short answer
It depends on the bank. Some will let you go up to 70% against the guarantor's property, others work to 80%. And if your parents still have a mortgage, that debt comes off first, and some banks also factor in something like a year's worth of interest on it when they work out how much equity is actually available.
So sometimes it's a matter of shopping banks, their valuations and their policies to make sure we fit the criteria for what you're trying to do with a guarantor. That's the part I do, so you don't need to think about all this stuff.
The 60 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.
How the banks work it out
The most common setting is a cap on total lending against your parents' property, generally 70% of its value. Total lending means everything secured on it: their own mortgage if they have one, plus the guarantee for your loan, plus any other guarantees they've already given. So the guarantee has to fit inside whatever room is left under that line.
Some banks work it a different way: they take 80% of the guarantor's property value, subtract your parents' existing commitments, and that's the equity available. But they may also cap the guarantee itself at a portion of the property's value, so it's not as simple as the bigger percentage always winning. Every bank writes its own rules here, and some have changed them in recent years.
What it looks like with numbers
To give you a bit of an idea, say your parents' house values at $1M and they still owe $200k. At a 70% cap, total lending against it can be $700k. Take off their $200k and there's up to $500k of room for the guarantee.
Now the good news: a guarantee usually doesn't need to be anywhere near that big. Its job is generally to cover the gap between your deposit and 20% of the price, plus costs, so you avoid lenders mortgage insurance. On a $600k purchase where you've got a small deposit, the guarantee might only need to be somewhere in the low hundreds of thousands. Plenty of parents have more than enough equity, even with a mortgage still running.
When your parents still have a mortgage
This is where banks split. Some are happy to take a second mortgage behind your parents' existing lender, and a couple of those add something like a year's interest on that existing debt into the calculation, which shaves the available equity a little more. Others will only take a guarantor property if they hold the first mortgage over it, which can rule them out entirely if your parents bank elsewhere.
So if your parents still owe money on their place, the lender choice matters more, not less. The same family can fit comfortably at one bank and miss at another.
The honest bit: the valuation on their place drives it
All of these limits are percentages of what the bank values your parents' property at, not what they think it's worth. A lower valuation shrinks the room for the guarantee, sometimes enough to change which banks work.
That's why shopping valuations and policies together is part of the job. We have a chat about how it might work for your situation, then find the ones that fit best.
Want to know if your parents' equity is enough?
A 30 minute call. We look at your deposit, their property and what they still owe, and work out how big the guarantee needs to be and which banks it fits.
No cost to you. The bank pays me when a loan settles. · How I get paid
Next question
My parents still have a mortgage. Can they go guarantor without moving their loan to another bank?Yes. Some banks want your parents' loan moved over, but others will take a second mortgage behind their current bank.
Related answers
The full guide: How to buy your first home The full guide: Guarantor home loans If my parents go guarantor, what are they actually risking? How much of my equity can I actually use to fund the next property? Does my parents going guarantor affect their ability to retire, or to borrow money themselves? 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.