Buying a property can be daunting for first-timers, as the initial money down is a substantial investment for most. Fortunately, there is an option for first-time buyers that allows them to purchase a home without the need to put down a full deposit, called a family pledge home loan.

Family pledge home loans allow buyers to purchase a home without a full deposit.
What is a Family Pledge Home Loan?
A family pledge home loan, also known as family guarantee home loan, is a type of loan that enables those who struggle to put up the initial deposit for a house to become homeowners through the help of a family member.
Instead of having to put down a deposit, a buyer’s family member - usually a parent - can put up part of their house’s equity as a guarantee so that young home buyers can afford their first property.
Family pledge loans can also be used to cover additional expenses, such as legal fees and stamp duty, which arise during the purchase of a property. Moreover, it alleviates the need for the home buyer to spend money on Lenders' Mortgage Insurance (LMI).
How Do Family Pledge Home Loans Work?
Instead of having to put up the full deposit of say 20 per cent of the value of the home, first-time buyers can pay a smaller deposit and have the remainder of the required deposit “guaranteed” by a family member who puts up home equity as the guarantee. This option is available for owner-occupier purchases, as well as first home buyers purchasing an investment property, and is available on a range of home loans from various lenders.

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Family pledge allows first-time home buyers to enter the property market sooner without having to put a giant lump sum down as a deposit and without having to spend anything on mortgage insurance.
The supporting family member, on the other hand, can help their children/family members enter the property market without having to pay for a part of the deposit in cash and without having to worry about making the loan payments as they are covered by the borrower. Moreover, the family member only guarantees the gap between the available and the required deposit as opposed to the entire mortgage, which also means that the guarantee can be removed at a later point in time as the equity value of the purchased home grows.
Family pledge home loans are, therefore, an excellent option for young, first-time buyers who want to buy a home but are concerned about the costs involved. Providing you have a parent or family member who can act as a guarantor, you can make purchasing your dream home or investment property a reality sooner than you may have expected.
To learn more about family pledge home loans and how you can benefit from them, you can contact DPN Property here.