Check how your parents helped.
If your parents used their property to help secure your home loan, that arrangement may no longer be needed forever. You might have paid down the debt, your home might be worth more, or your financial position might be stronger than it was when you bought.
Start with the loan documents. Were your parents guarantors, providing a guarantee or security over their own property? Or are they named as co-borrowers on your loan or co-owners on your property title?
This guide covers releasing a parent’s guarantee. Removing a co-borrower or changing ownership is a different process and may have legal, tax and transfer-duty implications. Get advice specific to that arrangement before making changes.
Can your loan stand on its own?
There is no anniversary date when the guarantee automatically disappears. A lender needs to be comfortable that your home adequately secures the loan on its own and that you can meet the repayments without your parents’ support.
A useful starting point is your loan-to-value ratio (LVR): your loan balance divided by the lender’s valuation of your property.
That position may give you a stronger case for releasing the guarantee than you had when you first bought.
The lender’s own valuation and policy determine the actual assessment.An LVR around 80% or lower is often a useful point to request a review. It is not a promise of approval. The lender may order its own valuation and assess your income, expenses, debts, credit history and the terms of the original guarantee.
Can I remove my parents as guarantors without refinancing?
Possibly. Ask your current lender whether it can release the guarantee while leaving your existing home loan in place. Its answer will depend on its policy, the loan structure and your current position.
Refinancing is another option if your current lender cannot release the guarantee on suitable terms, or if you want to review your rate and loan features at the same time. Tell the proposed new lender that releasing your parents is a key goal. Changing lenders does not, by itself, guarantee that they are out of the arrangement.
If your LVR is still high, removing their security could mean paying lenders mortgage insurance (LMI), depending on the lender and loan. Weigh that cost against the benefit of releasing the guarantee and any potential savings from switching.
See how we review a refinance →What if my parents are on the loan or title?
A parent who signed as a co-borrower has a different obligation from someone who provided a guarantee. Removing them generally requires the lender to assess whether the remaining borrower can carry the debt.
If a parent also owns a share of the property, changing the title is a separate legal transaction. Do not assume that refinancing the mortgage will change the ownership records or that a transfer between family members is free of duty or tax. Speak with a solicitor or conveyancer and your tax adviser before proceeding.
Five things to do next.
- 01Find the documents.
Check the loan statements, guarantee and any security registered over your parents’ property.
- 02Work out your approximate LVR.
Use your current balance and a realistic property value as a starting estimate. The lender may reach a different valuation.
- 03Ask your lender about release.
Find out whether it can remove the guarantee, what assessment it requires and what it will cost.
- 04Compare the full options.
If refinancing, look at fees, LMI, loan features, repayments and the remaining loan term, as well as the interest rate.
- 05Get confirmation in writing.
Once completed, check that the guarantee and any related security over your parents’ property have been formally discharged.
Your parents helped you get through the door. If your loan can now stand on its own, it is worth checking whether they can step out of the arrangement.
Guarantor release FAQs.
Can I remove my parents as guarantors without refinancing?
Possibly. Your current lender may be able to release the guarantee after a valuation and review. Its policy, your loan structure and financial position determine the process.
When can a parent’s guarantee be released?
There is no automatic date. The lender must accept your home as sufficient security and assess your ability to repay. An LVR around 80% or lower can be a useful point to ask for a review, but it does not guarantee release.
Does refinancing automatically release the guarantor?
No. Confirm that the proposed loan can proceed without the guarantee and that the existing guarantee and any related security will be formally discharged.
What if my parents are co-borrowers or on the title?
Removing a co-borrower or transferring property ownership is different from releasing a guarantee. It may involve a new lending assessment and legal, tax or transfer-duty consequences.
Understand the guarantee itself.
ASIC’s MoneySmart explains the responsibilities and risks of going guarantor on a loan ↗. Your own signed documents and lender’s current requirements determine how your arrangement can end.
General information only. This guide does not take into account your circumstances. Lender policies, valuations, approval criteria and costs vary. Seek independent legal and tax advice where a loan party or property ownership may change.