Remove Guarantor? Find Freedom Fast (2026 Guide)

As an Australian homeowner, you might find yourself asking, "Can I remove a guarantor from my loan?" Whether due to changes in financial circumstances, improving credit health, or simply wanting to relieve a loved one from their obligations, removing a guarantor can be a significant step. In this comprehensive guide, we'll explore the ins and outs of removing a guarantor, offering you practical advice and expert insights to navigate this potentially complex process.

Understanding Loan Guarantors

A guarantor is someone who agrees to be responsible for your loan if you are unable to make repayments. This arrangement is common for those who may not qualify for a loan independently due to insufficient income or credit history. Guarantors provide additional security to lenders, which can make it easier for borrowers to access loans, often with more favourable terms.

In Australia, guarantor loans are particularly popular among first-time homebuyers, where parents often step in to assist their children in entering the property market. While this can be an effective way to secure a loan, it's important to understand that guarantors bear significant risk, as they are liable for the debt if the primary borrower defaults.

Current Market Conditions and Requirements

As of 2026, Australia’s housing market continues to show strong growth, with interest rates for home loans ranging from 6.49% to 12%, depending on the lender and the borrower's financial profile. Guarantor loans are still a popular choice, but lenders have become more stringent with their requirements.

To remove a guarantor from a loan, borrowers typically need to demonstrate improved financial stability and creditworthiness. This may include:

• Having a stable income source that meets lender criteria
• Building a strong credit history with a score that meets or exceeds lender requirements
• Ensuring the property value has appreciated, thus increasing equity

The process can vary significantly between lenders, and it's essential to understand the specific requirements of your lender. At Esteb and Co, with access to over 83 lenders, our brokers can help you find the right fit for your circumstances.

Steps to Remove a Guarantor

Removing a guarantor from a loan involves several steps. Here’s a practical guide to help you through the process:

1. Review Your Loan Agreement: Begin by understanding the terms of your loan and any clauses related to guarantors. This will give you a clearer idea of what is required to release the guarantor.
2. Assess Your Financial Situation: Evaluate whether you meet the lender's criteria for removing a guarantor. This includes checking your income, credit score, and property equity.
3. Contact Your Lender: Reach out to your lender to discuss your intention to remove the guarantor. They will provide specific instructions and requirements based on your loan agreement.
4. Submit Documentation: Prepare and submit necessary documents, such as proof of income, credit reports, and property valuation. This will help in reassessing your loan application.
5. Refinance if Necessary: If your lender does not allow the removal of a guarantor without refinancing, consider this option. Refinancing can also offer the opportunity to secure better loan terms.
6. Finalise the Process: Once the lender approves the guarantor's removal, ensure all paperwork is completed and the guarantor is officially released from the loan.

Expert Tips and Considerations

Here are some expert tips to consider when planning to remove a guarantor from your loan:

• Improve Your Financial Health: Work on improving your credit score and increasing your savings. This will not only help in removing the guarantor but also in securing better loan terms in the future.
• Consult with a Mortgage Broker: At Esteb and Co, our brokers can offer personalised advice and leverage our access to 83+ lenders to find a suitable option for you.
• Consider Timing: Property values can fluctuate. If your property’s value has increased, you may have more equity, making it easier to remove the guarantor.
• Open Communication: Keep open lines of communication with your guarantor. They should be aware of your plans and any potential impacts.

Frequently Asked Questions

1. Can a guarantor be removed without refinancing?

   Yes, but it depends on the lender and your financial situation. Some lenders allow removal if certain criteria are met, while others may require refinancing.

2. What happens if the borrower defaults after the guarantor is removed?

   Once the guarantor is removed, they are no longer liable for the loan. Responsibility falls solely on the borrower.

3. How long does the removal process take?

   The process can vary but typically takes a few weeks to a couple of months, depending on the lender's requirements and your financial situation.

4. Is there a cost associated with removing a guarantor?

   There can be costs involved, such as refinancing fees or administrative charges imposed by the lender.

5. What if the lender denies my request to remove a guarantor?

   If denied, consider improving your financial situation or seeking options with another lender. A mortgage broker can assist in finding alternative solutions.

6. Can a guarantor voluntarily request to be removed?

   Yes, a guarantor can request removal, but it requires the borrower's cooperation and, often, the borrower meeting lender criteria independently.

7. What are the risks of being a guarantor?

   Guarantors are liable for the loan if the borrower defaults, which can affect their credit score and financial standing.