Family guarantee (family pledge or parental guarantee)

A home-loan arrangement in which a family member, usually a parent, allows the lender to take security over a portion of the equity in their own property to support the borrower's loan. The guarant...

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• referenceDefinition: {"term":"Family guarantee (family pledge or parental guarantee)","definition":"A home-loan arrangement in which a family member, usually a parent, allows the lender to take security over a portion of the equity in their own property to support the borrower's loan. The guarantor does not contribute cash and is not a borrower on the loan; they are only allowing the borrower to draw on that equity. Because the guarantor's property is used as security, that property is at risk if the borrower defaults. The guarantee can typically be released once the borrower has built sufficient equity, as the purchased property rises in value and the loan is paid down and the loan-to-value ratio improves. Lending criteria and availability vary by lender. This is general information about a lending structure, not credit assistance or personal advice.","primarySource":"https://moneysmart.gov.au/loans/going-guarantor-on-a-loan"}