Guarantor Mortgages
If your deposit, income, or credit history isn’t quite enough to secure a mortgage alone, a close family member offering their own savings or property as additional security can genuinely change the outcome – though it’s worth understanding the real commitment involved on both sides before proceeding.
What a Guarantor Mortgage Actually Is
A guarantor mortgage lets a family member, typically a parent or grandparent, back your mortgage application by offering their savings or property as additional security. The guarantor doesn’t own any share of the property and isn’t named on the title deeds, but they take on a genuine legal obligation to cover your mortgage payments if you’re unable to.
The Two Main Ways a Guarantor Can Provide Security
Understanding which structure applies to a specific lender’s product matters, since the mechanics genuinely differ.
Savings as Security
The guarantor deposits a lump sum, commonly somewhere between 5% and 20% of the property’s value, into a dedicated account held by the lender. The money continues earning interest but is locked away, typically released once a set point is reached – either after an agreed number of years, or once you’ve paid down a certain amount of the mortgage.
Property as Security
Rather than cash, the guarantor offers equity in their own home as collateral, with the lender placing a legal charge against it. This route generally requires the guarantor to own their property outright, or hold substantial equity, since this is what the lender is genuinely relying on if things go wrong.
Who Can Act as a Guarantor
Most lenders require a close family member, most commonly a parent or grandparent, though a handful will accept siblings, spouses with separate finances, or other close relatives. Guarantors typically need to be at least 21, with many lenders applying an upper age limit meaning the guarantor shouldn’t turn 75 before the mortgage term ends, though this varies by lender and individual circumstances.
What Lenders Actually Check About the Guarantor
Guarantors go through a credit check in the same way you would, and lenders generally want to see a clean, healthy credit history, since they’re relying on the guarantor’s financial stability as much as yours. If the guarantor still has their own mortgage, lenders will want evidence their income comfortably covers both their own commitments and yours if it ever came to that; retired guarantors need to demonstrate sufficient funds are genuinely available instead.
What This Can Mean for How Much You Can Borrow
With a guarantor’s backing, some lenders will approve a larger mortgage than you’d qualify for alone, or accept a considerably smaller deposit than they’d otherwise require. In some cases, a guarantor mortgage can even allow borrowing 100% of the property’s value, effectively removing the deposit requirement entirely, provided the guarantor’s security is strong enough.
The Genuine Risk to the Guarantor
If you fall behind on payments and the guarantor is called upon to step in, and they’re also unable to cover the shortfall, their own savings or home genuinely could be lost – this isn’t a formality, it’s a real financial exposure that deserves proper consideration before anyone commits. It’s also worth knowing that being a guarantor can appear as a liability on the guarantor’s own credit file, potentially affecting their own ability to borrow in future, even if you never miss a payment.
Why Independent Legal Advice Matters for the Guarantor
Given the genuine financial exposure involved, it’s worth the guarantor seeking independent legal and financial advice before agreeing to the arrangement, separate from any advice you receive as the borrower. This isn’t a box-ticking exercise – a solicitor can properly explain exactly what the guarantor is committing to and under what circumstances their savings or property could genuinely be at risk.
Removing the Guarantor Later
Most guarantor arrangements can be reviewed once you’ve built up sufficient equity in the property, either through paying down the mortgage or genuine growth in the property’s value, at which point you may be able to remortgage onto a standard product without needing the guarantor’s continued backing. It’s worth understanding this isn’t always automatic – the exact terms and review point genuinely vary by lender, so it’s worth clarifying this clearly at the outset rather than assuming.
What Happens If the Guarantor Dies or Their Circumstances Change
If your guarantor passes away during the mortgage term, the lender may require you to find a replacement guarantor, though by that point your own financial position may have improved enough – through paying down the mortgage, increased income, or even inheriting from the guarantor – that continuing without one becomes possible. It’s worth discussing a genuine “reserve guarantor” option with your broker from the outset if this is a realistic concern.
Not Usually Available for Buy-to-Let
Guarantor mortgages are generally not offered for buy-to-let purchases, since buy-to-let lending is typically assessed on the rental income potential of the property itself rather than through this kind of family-backed security structure. Our Buy-to-Let Mortgages page covers how rental property applications are genuinely assessed instead.
How This Differs From a Joint Borrower Sole Proprietor Mortgage
It’s worth understanding that a guarantor mortgage is a genuinely different structure to a Joint Borrower Sole Proprietor arrangement, where a family member is named on the mortgage itself and fully liable for the debt from day one, rather than only stepping in if you default. A guarantor’s liability is triggered specifically by missed payments; a JBSP co-borrower shares full responsibility throughout, regardless of whether payments are ever missed. Our Joint Borrower Sole Proprietor (JBSP) Mortgage page covers this alternative structure in full detail, including a genuine Stamp Duty advantage worth understanding if a parent’s income, rather than their property or savings, is what could help most.
Why Not Every Lender Offers This
Guarantor mortgages are a genuinely more specialist product, offered by a narrower range of lenders – typically building societies more often than the largest high street banks – so it’s worth working with a broker who can compare across those genuinely offering this structure, rather than assuming your usual bank provides it.
Frequently Asked Questions
Does the guarantor own part of the property?
No – the guarantor isn’t named on the title deeds and doesn’t own any share, but they are legally liable to cover payments if you default.
How much security does a guarantor need to provide?
This depends on the structure – savings-based security is commonly 5-20% of the property’s value; property-based security typically requires the guarantor to own their home outright or hold substantial equity.
Can a guarantor mortgage let me borrow 100% of the property’s value?
In some cases yes, provided the guarantor’s security is strong enough to satisfy the lender.
What happens if I miss payments and my guarantor can’t cover them?
Their savings or property, whichever was used as security, could genuinely be at risk – this is a real financial exposure, not a formality.
Can the guarantor be removed later?
Often yes, once you’ve built sufficient equity, though the exact terms and timing vary by lender and should be clarified upfront.
Get in touch with details of your circumstances and your potential guarantor’s situation, and we’ll help you understand whether this route genuinely suits you both.
