Can you remove a guarantor from a mortgage?

Yes, you can remove your guarantor from your mortgage loan. When removing a guarantor from the mortgage loan, banks' main concern is their loan-to-value ratio (LVR), which is the percentage of the remaining loan amount against the value of their property. Realistically, you should try to eliminate the guarantor within 5 years or once you are in a financial position to remove it. But this comes down to your personal situation how quickly you have been able to pay the guarantor's share and the value of your property.

The guarantee will continue until the lender approves your request to delete it. If you have a guarantor on your loan, you can usually refinance a new mortgage loan with the existing guarantor or a new collateral. This is if you meet the lender's eligibility criteria. Doing the right research before committing to a loan agreement is a good idea.

However, you should keep in mind that if you want to refinance your loan, some lenders may prefer that you have at least 20% equity. If you are unable to provide 20% equity, you will likely be asked to pay the lender's mortgage insurance for your newly refinanced mortgage loan. More than 60% of first-time homebuyers in Australia receive financial assistance from their parents, either through donations or as loan guarantors. Through a guarantor loan, a borrower can pay a smaller deposit and avoid having to pay lender mortgage insurance (LMI).

If you can't remove the guarantor completely, you may be able to replace it with someone else. A guarantor is someone, usually a family member, who owns a property and is willing to secure the deposit of your mortgage loan. If you have made consistent repayments on your mortgage and have significantly reduced your loan amount, you may be able to eliminate your guarantor. The guarantor's mortgage loan is guaranteed not only by the property being purchased, but also by the guarantor's real estate.

We can refinance your guarantor mortgage loan so that you are the sole owner of your property and the borrower of your mortgage loan. Most guarantors agree to stay on the mortgage for 2 to 5 years, depending on how quickly the borrower repayments the loan or how quickly the value of the property increases. Not only does Sandra need to withdraw Pietro from the loan and title, but she also needs to refinance the guarantee of Pietro's parents. It is very important that both you and your guarantor understand all the conditions and obligations of a family guarantee before signing it.

Most major lenders or specialty lenders have similar policies when it comes to guarantor loans.

Ryan White
Ryan White

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