Updated October 2026 to reflect current law.
Has a family member asked you to guarantee their loan? Before you sign, most lenders will ask you to get independent legal advice. This means advice from a lawyer who doesn’t act for the lender or the borrower.
We give guarantors in Oran Park and across the Camden area clear, plain-English advice. Once you understand the risks, we can sign the legal advice certificate your lender asks for.
What is independent legal advice for guarantors?
A guarantee is a promise to repay someone else’s loan if they can’t. Independent legal advice is a private meeting where a lawyer explains that promise to you, without the borrower in the room.
We read the guarantee, the loan contract and any mortgage over your property. Then we tell you what you could lose, and what to ask the lender before you sign.
Key points at a glance:
- You could have to repay the whole guaranteed amount, plus interest and the lender’s costs.
- If you offer your home as security, the lender could sell it if the borrower defaults.
- Under the Banking Code of Practice, a bank generally can’t accept your guarantee until the third day after it gives you the key documents, unless you’ve had independent legal advice.
- Your guarantee should be limited to a set amount or the value of a particular property.
- You can usually withdraw in writing before the loan is first drawn down.
Book independent legal advice so you know exactly what you’re signing before you guarantee a loan.
Why is independent legal advice important for guarantors?
- You learn your real risk. Guarantee documents are long and written to protect the lender. We tell you, in plain words, the most you could have to pay and which assets are at risk.
- Your lender will usually ask for it. Many lenders won’t accept a guarantee without a legal advice certificate signed by your lawyer. This is lender policy rather than a law, but it’s very common.
- You can negotiate before you sign. Once you know the risk, you may be able to ask for a lower limit, a time limit or different security.
- It helps protect family relationships. When everyone understands the deal up front, there’s less chance of a dispute later.
Guaranteeing a loan in Oran Park: what families should know
Oran Park is in the Camden Council area of South West Sydney, and Council’s administration centre is on Central Avenue in Oran Park. The suburb sits in the Oran Park and Turner Road Precinct, part of Sydney’s South West Growth Area.
That means many local buyers are building a new home on a house and land package. New homes can be a stretch for first home buyers, so parents are often asked to help with a family guarantee (sometimes called a family pledge).
With a family guarantee, the parent guarantees part of the loan. The guarantee is usually secured by a mortgage over the parent’s own home. This can help the buyer borrow more, or avoid lenders mortgage insurance.
Guaranteeing a construction loan
If the borrower is building, the loan is usually a construction loan. The lender pays the builder in stages (called progress payments) as each part of the work is finished. Before you guarantee a construction loan, ask:
- Does my guarantee cover future increases, such as a top-up if building costs go up?
- What happens if the build is delayed, or the builder stops work?
- Can my guarantee be reduced or released once the home is finished and the loan is paid down?
Under the Banking Code, if a bank agrees to increase the limit of your guarantee, it must get your written acceptance first.
Getting released from a family guarantee later
Many families plan to remove the guarantee once the loan is smaller or the home has gone up in value. This doesn’t happen automatically. The borrower usually has to apply to the lender, and the lender will often want a new valuation. Ask how release works before you sign.
Your protections under the Banking Code of Practice
Most Australian banks have signed up to the Banking Code of Practice. The current version started on 28 February 2025. Part B6, “Guaranteeing a Loan”, sets out how banks must treat individual guarantors.
| Protection | What it means for you |
|---|---|
| Key documents before you sign | The bank must give you documents such as the proposed loan contract, any related credit report, financial statements the borrower gave the bank in the last two years and the latest account statement. |
| Past problems | The bank must tell you about any notice of demand it has made on the borrower in the last two years. |
| Time to think | The bank can’t accept your guarantee until the third day after you get this information. It can accept earlier if you or your lawyer confirm you’ve had independent legal advice. |
| A meeting without the borrower | Before accepting your guarantee, the bank must take reasonable steps to meet you without the borrower present. This step isn’t needed if you’ve had independent legal advice. |
| A limit on your liability | Your guarantee must be limited to a set amount and/or the value of a specified property or other assets. |
| Updates if things go wrong | The bank must send you a copy of any formal demand or default notice it sends the borrower, within 14 days. |
| The borrower’s security first | Generally, the bank must enforce the borrower’s own mortgage or security before it enforces a mortgage over your home. |
Important: the Code only binds banks that have signed up to it. Many non-bank and private lenders don’t follow it. Some protections also don’t apply to company directors, trustees or partners who guarantee a business loan. If your lender isn’t a bank, independent advice is even more important.
Does the National Credit Code protect guarantors?
Sometimes. The National Credit Code is part of the National Consumer Credit Protection Act 2009. It covers loans to individuals for personal or household purposes, and loans to buy or renovate residential investment property.
If the Code covers the loan, the lender must give you a copy of the proposed loan contract and an information statement before you sign. You can also withdraw by written notice before the loan is first drawn down.
It usually doesn’t cover business loans, or loans to companies or SMSF trustees. In those cases, your protection mainly comes from the contract, the Banking Code (if the lender is a bank) and the general law.
What happens at your independent legal advice appointment?
- We get the documents. Your lender or broker sends us the guarantee, loan contract and any mortgage. We review them before we meet.
- We confirm who you are. Please bring photo ID, such as a driver licence or passport.
- We meet with you alone. We explain the documents and your risks. We also ask a few questions to check you’re signing freely and understand what you’re agreeing to.
- You decide. You can sign, ask the lender for changes, or say no. Saying no is always your right.
- We sign the certificate. If you go ahead, we sign the legal advice certificate and return it with your signed documents.
We can meet in person or by video. Some lenders insist on a face-to-face meeting, so we’ll check your lender’s rules first. For a general overview, ASIC’s Moneysmart website also has a helpful guide to going guarantor on a loan.
Frequently asked questions
Is there a cooling-off period for guarantors?
Not as such. The Banking Code gives you time to think, because a bank generally can’t accept your guarantee until the third day after you receive the key documents. If you’ve had independent legal advice, the bank can accept it sooner. You can usually still withdraw in writing before the loan is first drawn down.
Can the borrower’s lawyer advise me?
No. Lenders want advice from a lawyer who acts only for you. That way, the advice is about your interests, not the borrower’s.
Can I limit how much I guarantee?
Yes. Under the Banking Code, your guarantee must be limited to a set amount or the value of a particular property. You can also write to the bank later to ask for a lower limit. The bank doesn’t have to agree in some cases, for example if the new limit wouldn’t cover what the borrower already owes.
Do I have to sign after the appointment?
No. The appointment is about helping you make an informed choice. If you’re not comfortable, you can ask for changes or decline.
Get in touch to book a time for independent legal advice before you sign your guarantee.
Why choose us?
Our lawyers have acted for banks and lenders and have drafted loan and guarantee documents. We use that experience to explain your documents clearly and point out the terms that matter most to you. Here’s what you can expect:
A banking and lending focus: Our work centres on banking, finance and property law. We regularly advise on guarantees for home loans, business loans and SMSF loans.
A fixed fee: We quote a fixed fee upfront, so you know the cost before we start.
In person or online: We can meet you in person or by video, whichever suits you and your lender’s requirements.
Need independent legal advice in Oran Park?
If you’ve been asked to sign a guarantee, talk to us before you sign. Learn more about our guarantor independent legal advice service, including what we need from you and how the certificate works.
If you’re guaranteeing a family member’s home loan, our guide to family guarantees explains the benefits and risks in more detail. We also advise guarantors in nearby Gregory Hills.
Alternatively, you can give us a call, send us a message or book a call with us by clicking the buttons below.
This article is general information only and is not legal advice. It reflects Australian law at the date of publication. Please contact us for advice about your circumstances.
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