family guarantee loans from:

The guarantor uses equity from their home (or even savings) to guarantee part of their child’s loan. The key benefits for the borrower, are that it can help them enter the property market earlier and with less fees.

• By removing the need for a substantial deposit to be saved, the applicant can purchase a property often years earlier.
• Only the applicant makes regular loan repayments (The guarantor is only called on if the applicant breaches the loan contract.)
• The Guarantee helps the applicant achieve a better LVR - often resulting in reduced or no Lenders Mortgage Insurance

Amanda is planning to purchase a $600,000 unit with a $30,000 deposit (LVR of 95%).  Mortgage Insurance (LMI) would be payable due to the high LVR . Provided they have equity in their home, Amanda's parents could provide a Parental Guarantee of $90,000 as additional security on the loan, reducing her LVR to 80%. 

In this example, it could mean Amanda can avoid paying Lenders Mortgage Insurance, saving her up to $25,707.

With many lenders, lower LVR's can also result in lower interest rates.   

Rick's parents wanted to help him get into the property market as prices seemed to be going up faster than his deposit. Only problem was, they refused to  put their home up as security.

Rick's parents had $80,000 in savings that they did not require access to, so they deposited it as a term deposit (earning a competitive interest rate) with the Lender providing the loan to their son. This cash deposit was not used as a part of the loan - it was merely acting as the security. 

If things somehow went "pear shaped" the only liability the parents had, was the the cash deposit - not their house.