Family Guarantee Loans doing roaring trade at family-run business
Five years back, mortgage broker Craig Thorn decided to hand the keys to Auspak Home Loans at sunny Coogee in Sydney to his two sons, Blake (pictured above right) and Reece (pictured above left).
Craig wanted to keep the business in the family, having established Auspak Home Loans in 2008 after selling former brokerage Auspak Financial Services to a public company.
The passing of the flame set Blake and Reece on a new career path, which they’ve embraced with open arms. Though as with most things in life, mortgage broking wasn’t always the plan.
Discussing his first five years co-running Auspak with MPA, Blake said he was initially lukewarm on being a mortgage broker. His initial ambition was to be a real estate agent; a career path that “didn’t turn out as glamorous as I thought it was”.
Getting fed up with the long commute away from the sandy eastern suburbs sealed the deal for Blake, and as the 2010s came to a close, he decided to give mortgage broking a crack.
He has evidently found his calling. Today, Auspak Home Loans is settling up to $100 million of loans annually, with a sharp focus on the stressed first-home buyer market.
Running start
When Blake’s father passed down the reins of Auspak, they came with a handful of pre-approvals to get him and his brother started, along with a direct line for credit support.
Blake acted as a buyer’s agent on these pre-approvals, helping the buyers find and negotiate suitable properties.
Word of mouth played an important part in growing Blake’s client network from there – and while there has been a lot of self-teaching, his father has been a mentor to him every step of the way.
Blake has seen the property market change dramatically, even in the short space of half a decade.
“First year out of uni, if you want to buy a property, it’s very hard to buy in Sydney,” he said of the current state of the market. “But when I first started, buyers could afford in the eastern suburbs, you could buy something in Maroubra and get really good rates for it, but now they’re probably priced out.”
With Sydney slipping further from reach, first-home buyers are looking elsewhere, particularly further north to Queensland, although Perth is also seeing strong interest at the moment, according to Blake.
For many, it’s a strategic move – an initial foothold in the Australian property market with hopes of building enough equity to eventually buy in Sydney within four or five years.
“People just want to get in,” said Blake. One tool in particular is helping borrowers do this the Family Guarantor Loan.
Selling like hotcakes
Auspak Home Loans is doing a roaring trade in Family Guarantor Loans.
Blake said about four in five first-home buyers that come to Auspak are using family guarantors to enter the property market.
Family Guarantor Loans let buyers bypass years of saving by leveraging a family member’s property as security.
Under the structure described by Blake, a borrower takes out an 80% LVR loan for the bulk of the loan (loan 1), while an immediate family member covers the remaining 20%, secured by their property (loan 2).
“The primary goal is to pay down Loan 2 as quickly as possible so the guarantor can be released, reducing their risk exposure,” said Blake.
On top of securing a loan without a large deposit, Family Guarantor Loans also avoid costly Lenders’ Mortgage Insurance (LMI), while any savings can be held in an offset account, potentially reducing interest repayments.
The benefits of this model are as obvious as the risks. While the goal is to get Loan 2 paid down as quickly as possible, the default risk is still there – as is the risk of a lender taking action on the parent’s property.
“If financial issues arise, it can put pressure on the guarantor and borrower relationship,” said Blake, making due diligence on such deals a top priority.
“For all our first-time property buyers, we complete a property budget assessment, estimating all costs beyond just loan repayments – including council rates, water, maintenance, strata fees and other ongoing expenses,” Blake said.
“We find this to be one of the most crucial steps in the process, as it ensures clients fully understand the financial commitment involved in homeownership.
“This approach benefits both the client and our team, ensuring complete transparency and building trust – allowing us to support them not just now, but for the next 30 years.”
Blake also stressed the importance of considering strategies such as maintaining a savings buffer in an offset account, “as well as income protection and insurance options to provide further financial security”.
Going forward, Blake and Reece will keep growing Auspak Home Loans’ loan book from their sunny Coogee HQ.
Having settled $100 million in 2024, they’re hoping to double it to $200 million this year. Whatever the outcome, it will no doubt be a family effort.
