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Julian Finch warns: Guarantor loans are rising and so is financial fallout

Announcement posted by Invigorate PR 16 Jul 2025

As housing affordability tightens and more Australians turn to family for financial support, mortgage expert Julian Finch is warning parents, siblings and partners to think carefully before agreeing to become a personal guarantor, especially on home or personal loans.

 

Finch, founder and CEO of Finch Financial, said the emotional pull to help a loved one can lead people to sign dangerous loan guarantees without fully understanding the legal and financial consequences.

 

"Being a guarantor is often seen as a kind-hearted gesture, but the reality is you're putting your own financial future at risk," Finch said.

 

"If the borrower can't repay, the bank can and will come after you and that could mean losing your home, damaging your credit score or jeopardising your retirement."

 

With decades of mortgage brokerage and commercial lending experience, Finch has helped thousands of Australians successfully navigate the lending process. Finch Financial has one of the highest loan approval rates in the country, often securing approvals within minutes.

 

Guarantor loans on the rise

 

With property prices still high and deposit requirements out of reach for many young Australians, guarantor loans are becoming more common. These loans allow a borrower to access finance with little or no deposit by having someone else, usually a parent, guarantee the loan using their own home as security.

 

But Finch said this arrangement can unravel quickly if circumstances change.

 

"We've seen it happen where a couple breaks up and the guarantor is still on the hook or the borrower loses their job and repayments stop," Finch said.

 

"It's not about trust, it's about protection. If you don't have safeguards in place, you could be pulled into years of financial stress."

 

What can the bank do to a guarantor if the borrower defaults?

 

According to Finch, many people wrongly assume that being a guarantor is symbolic or low-risk, but legally, it carries the full weight of the loan.

 

"If the borrower defaults, the bank doesn't just ask the guarantor to help, they treat the guarantor as fully liable for the debt," Finch said. 

 

"That means they can start legal proceedings to recover the money, place a caveat or charge on the guarantor's property or even force the sale of their home to repay the loan."

Finch adds that guarantors may also face bankruptcy proceedings, asset seizure and long-term damage to their credit report.

 

"The bank doesn't care that you didn't spend the money. As far as they're concerned, you signed the loan and you're just as responsible as the borrower," he said.

 

Don't let love cloud your judgment

 

Finch urged potential guarantors to treat the decision like a serious financial transaction, not an emotional favour.

 

"It's natural to want to help your child or partner buy a home, but you must go in with your eyes open," he said.

 

"Have the hard conversations. Get independent legal and financial advice. Make sure the borrower understands their obligations and make sure you understand yours."

 

When it's safe and when it's not

 

While some guarantor arrangements can work well, Finch warned that the risks are amplified when the borrower has unstable income, poor credit history or when the guarantor doesn't have a clear exit strategy.

 

"The biggest red flag is when people say, 'Don't worry, nothing will go wrong,'" he said.

 

"If you're being rushed, pressured or emotionally guilt-tripped into signing, stop. A home loan lasts for decades. So does the fallout if it goes wrong.

 

"Sadly many issues occur when a couple buy a home together and they get one set of parents to be the guarantor.  When the couple split up or one person kicks the other out, things get ugly.

 

"Often, the outcome is disastrous for the guarantor."

 

You wouldn't co-sign a contract you didn't read so don't be a guarantor unless you understand the risk

 

Finch said the rising cost of living and higher interest rates are making loan defaults more common, which in turn makes it even more dangerous to act as a guarantor.

 

"Your good intentions could cost you everything," he said.

 

"Before you sign anything, ask yourself: can I afford to repay this debt if the borrower can't? If the answer is no, then you shouldn't be a guarantor. It's that simple."

 

About Finch Financial Services 

 

Based in Hurstville, NSW, Finch Financial Services has been servicing Australian families and businesses with home, personal and commercial loans as well as asset finance services since 2015. Ranked amongst the top five percent of brokerages in Australia according to data from the MFAA, Finch Financial Services is a leading brokerage and family-owned business that specialises in finding its customers loans that are tailored to their needs and goals. 

 

https://finchfinancial.com.au/

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