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My parents still have a mortgage. Can they go guarantor without moving their loan to another bank?
Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 3 min read
The short answer
Yes. Some banks want your parents to move their home loan over to the bank we're doing the guarantee with. Others are happy to take what's called a second mortgage over their place, so your parents' loan can stay right where it is.
Most parents have their stuff pretty set and forget, so I like to find a solution where the bank goes second mortgage on your parents' property and leaves their loan alone. That narrows the choice of lenders a little, but it's usually worth it.
The 60 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.
How a second mortgage works
Your parents keep their first mortgage with their current bank. The bank we do your guarantee with sits behind it as the second mortgage. It's a priority order, essentially. If something happens and the property ever had to be sold, the first mortgage gets its money first and the second mortgage gets paid after that.
So for your parents, day to day, nothing changes. Same bank, same loan, same repayments. There's just an extra registration on the title for your guarantee, and once your loan gets to 80% of your property's value, we can look at taking that off.
Which banks will do it
The lenders split pretty cleanly on this. Some will only do a guarantee if they hold the first mortgage on the guarantor's property, which means your parents would have to refinance their loan over to them. Others will take a second mortgage behind another bank, and a few are silent on it and decide case by case.
Even among the ones that will, there are conditions. Some need the first bank's consent before they can register behind it. Others don't need consent but will take your parents' existing loan off the equity they count. Either way it's paperwork rather than a deal breaker, but it adds a bit of time, so we start it early.
How much equity is left once their loan is counted
The catch is the arithmetic. The bank adds up your parents' own mortgage and the guarantee, and a lot of lenders cap that total at around 70% of what their place is worth. So if your parents have a big loan still owing, there may not be enough room left for the guarantee.
Here's a simple example. Parents' home worth $1m, so the 70% ceiling is $700k. If they owe $400k, there's around $300k of room. If you need a $120k guarantee to get your loan to 80%, it fits comfortably. If they owe $650k, it doesn't, and we'd look at a smaller guarantee, a bigger deposit or a different structure.
The honest bit: moving their loan isn't always a bad thing
Keeping your parents' loan where it is is usually the easier path, but if their own rate is ordinary, moving it to the guarantee bank could save them money as well. That's worth a look rather than ruling out.
Whatever the structure, your parents need to understand what they're signing. Most banks want guarantors to get independent legal advice, and I walk them through it too.
Parents willing to help but still paying off their own place?
A 30 minute call. We go through what they owe, what their place is worth, and which lenders can do your guarantee without touching their loan.
No cost to you. The bank pays me when a loan settles. · How I get paid
Next question
Can my aunt, uncle or sibling be my guarantor?A sibling, generally yes. An aunt or uncle, generally no.
Related answers
The full guide: How to buy your first home The full guide: Guarantor home loans How much of my parents' equity can actually be used to support a guarantor loan? Does a guarantor need to qualify for the loan themselves, or is having equity enough? If my parents go guarantor, what are they actually risking? Guarantor loan or the government 5% scheme: which one is best?Not your question? Book a call and ask it, or call 0437 189 939.