How to Remove a Guarantor From a Home Loan

To remove a guarantor from a home loan, your client asks the lender for a guarantee release. The lender agrees once the loan can stand on the borrower’s property and repayments alone. The lender usually tests this with the loan-to-value ratio (LVR), measured against its own current valuation, and with the client’s repayment record.

Yes, you can remove a guarantor from a mortgage before the loan is repaid, but release isn’t automatic. When the numbers fall short, the main routes are a lump-sum repayment, a partial release, substitute security or a refinance to another lender.

This guide covers releasing an existing guarantee. For who can become a guarantor and how a new guarantee is set up, see the guarantor home loan requirements.

Check Release Feasibility

Check release feasibility by dividing the remaining debt by a current valuation of your client’s property, then comparing that LVR with the lender’s release threshold. While the guarantee is in place, the guarantor’s security sits beside the borrower’s property. The release test removes it and asks whether the borrower’s property is enough security by itself.

Start with the full balance secured by the property, including every loan split. Then estimate the value the lender’s valuer is likely to accept, using recent comparable sales rather than the price your client hopes for. The loan-to-value ratio guide explains the calculation in more detail.

Each lender sets its own threshold. As at October 2026, Westpac usually considers a release only when repayments on all the borrowers’ loans are satisfactory. It also wants the LVR low enough that lenders mortgage insurance (LMI) isn’t needed, unless the borrower agrees to pay an LMI premium.

As at October 2026, NAB’s guarantor guide says release often comes once the loan reaches 80% of the property value or less.

Worked Example

This hypothetical client owes $552,000 on one loan secured by their home, and the lender’s release threshold is 80%. Three valuation outcomes show how the lender’s figure decides the answer.

Lender valuation	LVR on $552,000	Largest loan at 80%	Gap to close
$705,000	78.3%	$564,000	None
$690,000	80.0%	$552,000	None
$670,000	82.4%	$536,000	$16,000

At the $670,000 valuation, your client needs to repay $16,000 before a full release meets an 80% threshold. Alternatively, the lender could keep a smaller guarantee in place for that gap, which is a partial release.

Repayments, Serviceability and Property

Repayment conduct comes next, so check recent statements for missed or late repayments on every loan the borrowers hold with the lender. A clean record supports the request, while recent arrears give the lender a reason to wait.

Serviceability matters when the release changes the loan. Adding an LMI premium to the loan, increasing the loan or moving to a new lender creates new credit. The lender then checks your client can repay it from their own income.

The loan serviceability guide covers that test.

The property also has to remain acceptable security. The lender’s valuer reports on the home’s condition and value, and the valuation must support the LVR your calculation assumed.

How Long Does a Guarantor Stay on a Mortgage?

A guarantor stays on a mortgage until the lender agrees to release the guarantee after assessing the borrower’s equity and servicing, not for a fixed term. The time depends on how quickly your client repays the loan and how the property’s value changes.

CBA’s 19 July 2025 guarantor guide shows this with a fictional couple who release their guarantor after three years. They got there through extra repayments and rising property values in their area.

What Happens If a Guarantor Sells Their House?

When a guarantor’s house is sold while it secures the guarantee, the lender must agree to release or replace that security before the sale settles. The lender holds a mortgage over the guarantor’s property, and that mortgage has to be discharged for the buyer to take clear title. CBA’s guarantor guide asks prospective guarantors to consider this question before they sign.

Work out early which path fits the guarantor’s sale.

1. Full release. If your client’s equity already meets the lender’s threshold, run the release before settlement.
2. Substitute security. The guarantor or your client offers other security the lender accepts, such as another property. Westpac also accepts cash in a Westpac term deposit as guarantee security. The security swap guide explains substitution.
3. Paying out the guarantee. Under paragraph 123 of the 2025 Banking Code of Practice, a guarantor can end their liability by paying the lower of the borrower’s debt or the guarantee limit.

Confirm the lender’s discharge requirements before the guarantor signs a sale contract. The settlement date then allows time for the lender’s decision and the discharge of its mortgage.

Obtain the Assessment

Obtain the assessment by asking the current lender for a release review, then supplying the valuation and evidence it needs to test the loan without the guarantee. Follow these steps in order.

1. Contact the lender. Ask how it handles guarantee release, which form it uses and who must sign. At Westpac, as at October 2026, either the borrower or the guarantor can ask for release at any time.
2. Order the valuation. Ask the lender to arrange its own bank property valuation and confirm who pays the fee. A real estate agent’s appraisal is a sales estimate, so it won’t set the LVR.
3. Supply the evidence. Send recent loan statements that show the repayment history. If the release changes the loan, add the income and expense evidence the lender needs for its serviceability assessment.
4. Consider a partial release or refinance. Do this when the valuation leaves a gap the client can’t close with a lump-sum repayment.

A partial release reduces the guarantee limit to the amount still needed to keep the LVR at the lender’s threshold. Paragraph 116 of the Banking Code lets a guarantor write to the lender to limit their liability further. The lender can refuse in the cases the Code lists, including when the new limit wouldn’t cover the borrower’s existing debt under the loan.

Can You Refinance a Guarantor Home Loan?

Yes, your client can refinance a loan backed by a guarantor once they qualify for the new loan without the guarantee. The new lender assesses the client alone, with its own valuation, serviceability check and LMI decision if the LVR is above its LMI threshold.

A refinance is a new credit contract, so the Australian Securities and Investments Commission’s responsible lending rules apply. You make a preliminary assessment that the new loan isn’t unsuitable, and the lender makes its final assessment. When the new loan pays out the old one, the old lender discharges its mortgages and the guarantee ends with the debt it secured.

The refinance requirements guide covers the full application. To shortlist lenders first, describe your client’s scenario without the guarantee in Bulma’s Scenario Planner. It checks the scenario against 52+ lenders’ policies and calculates borrowing power at each.

Submit and Confirm Release

Submit the lender’s release or variation form, signed by every party it names, then treat the guarantee as ended only when the lender confirms the release in writing. Where the guarantor’s property was security, the guarantee isn’t finished until the lender’s mortgage over that property is discharged.

1. Complete the form. Use the lender’s current form and include any payment the release depends on, such as a lump-sum repayment or an LMI premium.
2. Track the decision. Record the lodgement date and answer any request for more evidence with the exact document the lender asks for.
3. Collect the written release. Ask the lender for a letter that names the guarantee, the guarantor and the loan it secured.

The guarantor and your client verify different things once the lender approves.

• The guarantor checks the written release letter. Where their home was security, they confirm the mortgage discharge is registered on their title. For a cash deposit used as security, they check the lender has released it.
• Your client checks the loan’s updated security, which should now list only their own property. If the release added an LMI premium or changed the loan amount, rate or product, they check the variation letter or new contract against the terms they agreed.

Both parties keep copies of the release letter, the discharge record and any loan variation. CBA’s 19 July 2025 guarantor guide describes the outcome as the guarantor leaving the loan contract with no ongoing liability.

When a Full Release Is Declined

When a lender declines a full release, ask it to state the LVR, repayment record or serviceability result it would accept. That answer tells you which of these alternatives can close the gap.

1. Make a lump-sum repayment. In the worked example, $16,000 brings the loan to 80% of a $670,000 valuation.
2. Pay an LMI premium. As at October 2026, Westpac considers release when the borrower is prepared to pay an LMI premium. If the premium is added to the loan, the lender assesses the larger loan’s serviceability.
3. Ask for a partial release. A lower guarantee limit leaves the guarantor with less exposure while the loan reduces.
4. Offer substitute security. Another property or a cash deposit the lender accepts can replace the guarantor’s home.
5. Refinance. Another lender with a different valuation or LMI policy can lend to your client without the guarantee.
6. Pay out the guarantee. The guarantor ends their liability by paying the lower of the debt or the guarantee limit, or by another arrangement the lender agrees to.
7. Wait and reapply. More repayments or a higher valuation can meet the threshold at the next review.

ANZ Guarantee Release

To remove a guarantor from an ANZ home loan, the borrower and guarantor apply for release once the borrower’s equity reaches 20%. ANZ’s 11 October 2025 guarantor guide sets out that 20% equity point.

ANZ’s process follows the general sequence above, with three differences shown on its pages as at October 2026. ANZ publishes a fixed equity point of 20%, and it measures that equity against its own valuation. A borrower named on the loan starts the online request, and guarantor changes go through ANZ’s Discharge and Variation Authority form.

1. Check equity against ANZ’s valuation. ANZ’s Security Guarantee page measures the LVR against the value ANZ places on the property. So 20% equity means an LVR of 80% or lower on ANZ’s figure, not on an agent’s appraisal or an online estimate.
2. Request the form. A borrower submits ANZ’s discharge and variation request with the loan account number and selects the option to update the home loan, including guarantor changes.
3. Complete and return the form. ANZ emails the Discharge and Variation Authority form with instructions for completing and returning it.
4. Confirm the release in writing. Get ANZ’s written confirmation that the guarantee is released, then check the discharge of any mortgage over the guarantor’s property.

If ANZ won’t release the guarantee and your client refinances to another lender instead, the ANZ mortgage discharge guide covers paying out the ANZ loan. Either way, start with the LVR on a lender valuation. That figure decides whether your client applies for a full release, closes a gap first or moves to a lender that accepts the loan alone.