Home Loans for Grandparents Helping Family in Perth, WA, The Guarantor Guide
Your grandchildren are ready to buy, but the deposit is the obstacle. You have equity in your home, you want to help, and you're wondering whether there's a way to put it to work without handing over cash you may need later. There is, and it's more structured than most families realise before they start asking questions.
A guarantor arrangement lets you use the equity in your property to cover the gap between what the buyer has saved and what the lender needs to avoid charging lenders mortgage insurance. The loan stays in your grandchild's name. You're not borrowing on their behalf, and no money changes hands at settlement. What changes is that your property sits as additional security for a limited portion of the loan until their equity builds enough to release it.
Our team helps families across Perth, WA work through exactly this kind of arrangement, comparing structures across 60+ lenders. The first home loan decisions are where lender choice makes the biggest practical difference for the family as a whole.
Key takeaways
- The guarantee typically covers only the deposit gap, not the whole loan.
- No money changes hands at settlement in a guarantor arrangement.
- The guarantee is usually released once the borrower reaches 80% LVR.
Can grandparents act as guarantors on a home loan in Perth, WA?
Yes, grandparents can act as guarantors in Perth, WA, though lender policy on who qualifies varies more than most families expect. Most lenders allow immediate family members, which typically includes parents, and a smaller number extend that to grandparents and siblings. The fact that you're a grandparent rather than a parent is the first thing to confirm with your broker before the family gets too far along in planning.
Most grandparents who come to us assume the lender's main concern is their age. In practice, the first question is whether the lender even includes grandparents on their approved guarantor list. Most of the major banks do not. Once we find the right panel match, the age question becomes much more manageable than families expected.
Joe Del Borrello · Director, Launch Finance · Chat to the Launch team →
How does a guarantor arrangement actually work?
The lender takes two securities: the property being bought, and a limited mortgage over your property as guarantor. Your property doesn't become co-security for the whole loan. The guarantee is sized to cover only the gap between what the buyer has saved and the 20% deposit threshold, which is the point at which lenders mortgage insurance no longer applies.
If your grandchild is buying a property at $700,000 with a 10% deposit saved ($70,000), the lender typically needs another $70,000 worth of security to bring the effective loan-to-value ratio down to 80%. That $70,000 gap is what the limited mortgage over your property covers. The guarantee is not over your whole property and is not over the whole loan.
The guarantee is released once the borrower's equity builds to the point where their loan sits at or below 80% LVR. That normally takes three to seven years, depending on how quickly values move and whether the borrower makes extra repayments. It does not require the loan to be repaid in full.
What do lenders actually require from a grandparent guarantor?
Lender requirements for a guarantor are specific and non-negotiable. Before you offer to guarantee a loan, it's worth knowing what the assessment looks like.
What lenders verify:
- › Equity in your property: enough to cover the guarantee amount with your own LVR staying comfortably under 80% after it is added.
- › Age at loan maturity: lenders assess the guarantor's age at the end of the loan term, not at application. Many lenders apply a cap of 65 to 70 at maturity, which can affect a 30-year loan term.
- › Independent legal advice: mandatory under most lender policies. You'll need to see your own solicitor, separate from the buyer's, before signing anything.
- › Relationship eligibility: the lender's published list of permitted guarantors. Grandparent eligibility varies by lender, which is why panel selection is the starting point.
- › The cap on the guarantee: most lenders limit a single guarantee to no more than 50% of the guarantor's security value. Knowing this cap tells you whether your equity is sufficient.
What government schemes can grandparents helping family use in Perth?
A guarantor arrangement and a government scheme can work alongside each other, and in some cases they combine well. The schemes below are the ones relevant to first home buyers in Perth, WA, any of which can sit alongside a guarantor structure.
Schemes worth knowing about:
- › First Home Guarantee: 5% deposit, no LMI, no income test. Perth price cap $850,000. Covers most unit markets; most Perth house medians exceed the cap.
- › WA First Home Owner Grant:$10,000 for new homes only, $800,000 price cap in Perth. Does not apply to established homes.
- › WA first home owner rate of duty: nil transfer duty to $600,000, then a concessional rate to $800,000. Applies to both new and established homes from 7 May 2026.
- › Keystart Low Deposit Home Loan: 2% deposit, no LMI, income limits apply ($155,000 singles, $228,000 couples and families), property limit $860,000.
- › Keystart Urban Connect Shared Equity: new apartments, townhouses and units to $800,000, 2% deposit minimum. A 1,000-loan allocation applies; confirm availability with Keystart before relying on it.
Help to Buy, the federal shared-equity scheme, cannot be combined with a state shared-equity scheme. A buyer using Keystart Urban Connect cannot also use Help to Buy.
Source: RevenueWA and Housing Australia.
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What does a grandparent guarantor need to weigh before committing?
The guarantee is a real liability, not a formality. If the borrower defaults, the lender can pursue the guarantor up to the capped guarantee amount. That cap is the protection, but it still means your property is at risk to that extent for the duration of the guarantee period.
The options worth weighing:
- › Guarantor structure: no cash outlay · limited mortgage over your property · released once borrower hits 80% LVR · risk capped to the guarantee amount
- › Cash gift to the buyer: no ongoing liability · reduces your available capital · may be treated as genuine savings by some lenders · does not replace a deposit requirement on its own
- › Joint borrower arrangement: you appear on the loan · affects your own borrowing capacity · stamp duty and CGT implications may apply · a separate conversation with a solicitor and accountant
If you're within ten years of needing your equity for aged care costs or your own next move, a guarantor structure deserves careful thought. Tying equity to another person's loan for three to seven years is a medium-term commitment, and lenders will not release it early on request alone.
How do mortgage brokers help grandparents get this structure right in Perth, WA?
The lender choice is almost the whole job here, because the policies that govern grandparent guarantors vary more between lenders than virtually any other part of home lending. Three things decide which panel members are worth approaching.
- › Guarantor eligibility list: some lenders limit guarantors to parents only; others include grandparents and siblings. Knowing each lender's published list before an application is lodged is the single most important step.
- › Guarantor age at maturity: lenders cap the guarantor's age at the end of the loan term differently, from 65 to 70. A 30-year loan and a 68-year-old guarantor requires a lender whose maturity age cap allows it, or a shorter loan term.
- › Guarantee sizing and release conditions: lenders differ on the maximum guarantee cap and on what triggers an early release review. Finding the lender whose conditions most closely match the family's exit timeline matters.
Comparing across a panel of 60+ lenders finds those differences side by side, rather than the family discovering them one application at a time.
Where the grandparent is in their late 60s, we'd usually look at lenders with a 70-year maturity cap and match a loan term that keeps the guarantee period short. The goal is finding a structure where the release timeline is realistic, not just technically possible on paper.
Joe Del Borrello · Director, Launch Finance · Chat to the Launch team →
When does a grandparent guarantee not make sense?
A guarantor arrangement works best when the equity is stable, the borrower's income is solid enough to service the loan without relying on the guarantee for more than the deposit gap, and both parties have a clear picture of how long the commitment will last.
It starts to become the wrong structure when the grandparent's equity is also their retirement plan. If your home is the asset you're counting on to fund a move into retirement living or to cover aged care, locking a portion of it as security for someone else's loan for an indeterminate period carries real risk. A lender will not release a guarantee simply because circumstances change on the guarantor's side.
It also doesn't suit families where the buyer's income genuinely can't service the loan independently. A guarantor covers the deposit gap, not the borrower's serviceability. If the loan would fail on income grounds without the grandparent being added as a co-borrower, that's a different structure with different implications and it deserves a separate conversation.
What approval challenges do grandparents face as guarantors?
The four hurdles that most often arise:
- › Lender eligibility: the most common obstacle. If the lender does not include grandparents on its approved guarantor list, the application cannot proceed there regardless of equity or capacity. Confirming this before choosing a lender saves significant time.
- › Age at loan maturity: a standard 30-year term can push the maturity age past 70 for a guarantor in their early 40s. Lenders handling this well typically shorten the term or structure the release conditions around a realistic equity-growth timeline rather than blocking the application.
- › Insufficient net equity: the guarantee must fit within the cap (commonly 50% of the guarantor's security value) and leave the guarantor's own LVR comfortably below 80% after it is added. A property with an existing mortgage may not have enough net equity to work.
- › Valuation shortfall: if the lender's valuation of the guarantor's property comes in below what the family assumed, the available guarantee amount shrinks. The lender's valuation, not the family's estimate, is what counts.
Frequently Asked Questions
Can grandparents act as guarantors on a home loan in Perth?
Yes, but only at lenders that include grandparents on their approved guarantor list. Most major banks limit guarantors to parents, so lender selection is the first step. A broker who can compare policies across a wide panel is the practical way to find which lenders will consider it.
Does being a guarantor affect a grandparent's own credit file?
The guarantee appears as a contingent liability on your credit file. It doesn't mean you're a borrower, but a lender assessing your own future credit application will see it. If the borrower defaults, your file can be affected through the claim process.
Can a grandparent guarantor be released before the loan is paid off?
Yes. The guarantee is typically released once the borrower's LVR falls to 80%, which usually takes three to seven years through a combination of repayments and property value growth. The loan does not need to be fully repaid for the release to be triggered.
Is a guarantor arrangement the same as a cash gift?
No. A cash gift reduces the deposit needed and involves no ongoing liability once given. A guarantor arrangement involves no cash changing hands but creates a contingent liability over your property for the guarantee period. Both can help a buyer, but the risk profiles are different.
Can the First Home Owner Grant be used alongside a guarantor loan?
Yes, provided the buyer is purchasing a new home under $800,000 in Perth and meets the WA FHOG eligibility criteria. The grant is applied at settlement. The guarantor structure and the grant are independent of each other.
Should grandparents use a mortgage broker or go directly to a bank?
A mortgage broker, every time. Grandparent guarantor eligibility is one of the most lender-specific policies in home lending, and a broker comparing across 60+ lenders identifies which ones will consider the arrangement before any application is lodged or any credit inquiry is recorded.
Your Next Steps
Helping your grandchildren buy is a meaningful thing to do, and getting the structure right protects both them and you. The guarantee size, the release conditions and the lender's eligibility rules need to line up before the family commits, and those three things vary considerably across the market.
Ready to find out which lenders will work best for your situation? Contact the Launch Finance team or call 08 9367 4222. We'll canvas our 60+ lender panel and find the most suitable options for your circumstances.
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External Resources
Launch Finance · Perth, WA · Launch Finance Pty Ltd (ABN 17 163 528 701), Corporate Credit Representative 454041 of BLSSA Pty Ltd (ABN 69 117 651 760), Australian Credit Licence 391237 · General information only - this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions.
