Yes, multiple guarantors can share responsibility, but this depends on the lender’s policies.

Details:
For example, parents could both act as guarantors, using their combined property equity or financial assets to help support the borrower’s loan. Each guarantor must meet the lender’s requirements, such as having sufficient equity and financial stability.

All guarantors must seek independent legal advice and sign formal agreements outlining their responsibilities. The lender will also assess whether the combined guarantees present any additional risk.

Releasing a guarantor typically involves fees for administration, property valuation, and legal documentation.

Details:
Before a guarantor can be released, the borrower needs to meet the lender’s requirements, usually by building enough equity in their home (at least 20%). Once this is achieved, the borrower can formally request to remove the guarantor.

Costs involved in this process may include:

• Administration fees: Charged by the lender for processing the guarantor’s release.
• Property valuation fees: The lender will usually require a new valuation of the borrower’s property to confirm it has enough equity.
• Legal fees: Both the borrower and guarantor may need updated legal documents, which can incur additional costs.

Yes, guarantors can agree to limit their liability to a specific amount.

Details:
Instead of guaranteeing the borrower’s entire loan, a guarantor can cap their responsibility at just enough to help the borrower reach a 20% deposit. For instance, if the borrower needs $500,000 ($100,000 for a 20% deposit) but only has $25,000 saved, the guarantor can guarantee $75,000 to make up the difference and help the borrower avoid Lenders Mortgage Insurance (LMI).

This arrangement protects the guarantor from being responsible for the full loan amount while still supporting the borrower.

Yes, but using a property in a trust requires extra legal steps and approval from the lender.

Details:
If a guarantor wants to use a property held in a trust as security, the lender will need:

• A copy of the trust deed to confirm that the property can legally be used as collateral.
• A formal resolution from the trustees approving the guarantee.
• Confirmation that the trust structure doesn’t restrict using the property for this purpose.

Additionally, the guarantor must obtain independent legal advice to understand the specific risks of using a trust property as security.

If the borrower repays the loan in full—whether by selling or refinancing—the guarantor is released.

Details:

• Selling the Home: If the borrower sells the property and the sale price is enough to fully repay the loan, the guarantor is automatically released. However, if the sale price doesn’t cover the full loan amount (a shortfall), the guarantor may still need to pay the remaining debt, up to the agreed guarantee amount.

• Refinancing the Loan:

  • If the borrower refinances with the same lender and now has enough equity (usually at least 20%), the guarantor can be released.
  • If the borrower refinances with another lender, the original loan is paid off, and the guarantor’s obligation ends. However, the new lender may require a new guarantee, and the guarantor would need to agree to the terms.