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July 12, 2026

Should You Be a Guarantor for Your Adult Child’s Home Loan?

Author: Vanessa Stoykov
Category: Kids & Money

When an adult child asks you to guarantee their first home loan, you’re not just facing a paperwork decision, you’re staring down one of the biggest money conversations in modern family life. As property prices soar and lending criteria tighten in Australia, the pressure on parents to help out is real. But before you sign anything, it’s crucial to understand exactly what you’re taking on; and how it could impact your own retirement planning.

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Understand the Real Risks of Being a Guarantor

Agreeing to be a guarantor for your child’s mortgage isn’t just a kind gesture, it’s a binding financial commitment. If your child can’t meet their repayments, the bank can demand the guaranteed amount from you. This could put your own home or retirement savings at risk, especially if you’re close to retiring and have fewer years to recover financially.

You might trust your child completely, but life is unpredictable. Job loss, illness, relationship breakdown, or rising interest rates can happen to anyone. If disaster strikes, being a guarantor can quickly turn from supportive to stressful.

Ask the Right Questions Before You Decide

It’s normal to feel torn between wanting to help your child and needing to protect your own future. Start by having a frank, honest conversation as a family. Ask questions like:

What happens if your income changes or you lose your job?
How long do you realistically expect the guarantee to stay in place?
What is the plan for refinancing down the track?
Could buying a less expensive property remove the need for a guarantor?

Having these conversations early helps set clear expectations and avoids future conflict. Protecting your own retirement is not selfish, it’s smart.

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Get Independent Legal and Financial Advice

Before signing any documents, it’s essential to get advice from a professional who isn’t emotionally involved. Legal advisers can explain exactly what you’re liable for and help identify any potential risks in the loan agreement. Financial advisers can model your retirement plans and show how acting as a guarantor might affect your ability to retire on time or borrow in the future.

If you don’t have a trusted adviser, you can use Vanessa’s free referral service to connect with an independent financial adviser who understands family lending and retirement planning.

Consider the Long-Term Impact on Your Retirement

Many parents underestimate how much financial security matters in the later stages of life. If acting as a guarantor puts your home or savings at risk, you could end up needing financial support from your children down the track. No one wants that cycle of dependency.

Sometimes, the greatest gift you can give your children is to remain financially independent. That way, you’re not only supporting them today, you’re making sure you won’t become a burden tomorrow.

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The Bottom Line: Make a Decision You’ll Be Proud Of

There’s no shame in saying no if the risks are too high. Open, courageous conversations about money protect everyone involved. If you do decide to help, make sure you set boundaries, put everything in writing, and review the arrangement regularly. And if you choose not to, explain your reasons with honesty and compassion.

Your financial wellbeing matters, now, and in the years to come. The goal isn’t just to help your child buy a home. It’s to make a decision you’ll thank yourself for later.

Resources to explore:

MoneySmart guide to guarantor loans and property buying
Financial advice referral at vanessastoykov.com.au/financial-advice/
General retirement planning tools at MoneySmart Retirement Planner

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Authors

Vanessa Stoykov

Vanessa has been passionate about writing and storytelling since her days of hiding under the doona with her torch to read after bedtime.
Kathy Skantzos

Kathy is a yoga-loving world traveller who also happens to moonlight as a business journalist and writer. She was the finance editor of news.com.au and the Managing Editor of CEO Magazine (Asia) before joining Vanessa and the evo squad.
Shayne Sommer

Shayne is second dan black belt in karate, and a budding romance writer with a difference. Why? Because she writes romance stories that always have a money lesson.
Antoinette Colbran

Specialising in stories for 50+ women, Antoinette draws from her own experiences to help other women avoid the pitfalls and see the benefits of understanding their money situation.
Michael Crooks

Michael Crooks is a more than 20 year writer and documentary maker who has worked with Time Inc and the BBC, who wants to expose the truth from real victims of financial crime to help others avoid their mistakes.
Kim Payne

Kim Payne has spent the past three decades as a speaker, trainer, business coach, and consultant in financial services. She has worked with and transformed hundreds of brilliant, educated, high achievers who are chronically under-living.
Rebecca Pritchard

Rebecca Pritchard is on a mission to help men and women achieve equality when growing a family.
Antony Perring

Ant is a writer, designer and business builder with a love of food, design and good living. He writes on food and money in an easy to do way.
Julie Hyde

Julie Hyde is a leader of leaders. A disruptor and a powerful people enabler who empowers leaders to make big things happen.
Joshua Pennell

As a Dad to four kids and a business owner, Josh is passionate about family and finances and is known as The Family Finance Guy.
Sid Lal

Sid is a serial entrepreneur who set up his first business when he was still in University. Since 2009 he has been heading Bruce Clay, first in India & more recently in Australia.
Lou Johnson

Lou Johnson believes in the power of sharing stories to build empathy, understanding and connection. Growing up surrounded by books and storytelling, alongside her drive to make a difference led her to a highly successful career in book publishing.
David Rae

Dave is a CERTIFIED FINANCIAL PLANNER® professional and has been a financial adviser since 2003. He works with a range of clients and has a strong focus on ethical and sustainable investing.
Natallia Smith

Natallia specializes in assisting pre-retiree single women—whether they are never married, widowed, separated, or divorced—understanding deeply the importance of financial stability during life's pivotal moments such as separation, divorce, retirement, and the loss of a loved one.
Mark Hoy

With over 15 years of experience in financial services, Mark established Wollemi Wealth Management in 2013. His business is built almost entirely on referrals and word of mouth — a testament to the trust, integrity, and long-term relationships he forms with his clients.
Derek Gascoigne

Derek Gascoigne is the State Manager for UniSuper Advice in Victoria and Tasmania. Derek has been with UniSuper for over 15 years, and his career in superannuation and financial services spans 27 years and counting.
Annika Bradley

Annika Bradley is Head of Advice Strategy, Research & Technical at UniSuper. She brings over 20 years of experience across investments and wealth management in both the public and private sectors.
Wayne Leggett

Wayne has been a recipient of numerous industry awards and was one of the first to qualify as a Certified Financial Planner (CFP). He has been heavily involved in industry affairs at the highest level, including serving as national president of the Association of Financial Advisers (now FAAA).
Conrad Francis

Conrad Francis is the Founding Director of Inspired Money, a Perth-based financial coaching and financial planning, mortgage broking and money coaching firm he established in 2011.
Andrew Beks

Andrew Beks is a Chartered Accountant and the founder of Simplified Business and Accounting.