Guarantor mortgages in the UK
Need information about getting a guarantor mortgage or acting as a guarantor for someone else? Get the right advice here.
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We’re always fielding enquiries from customers who are hoping to take out mortgages with the help of a guarantor as well as people who are wondering whether they can act as one for a friend or close family member. If either of those things applies to you, you’re sure to find our guide to getting a mortgage with a guarantor in the UK useful. Read on to find out more or make an enquiry to speak with an expert broker who arranges these deals every day.
The following topics are covered below…
- Guarantor mortgage definition: What are they?
- Guarantor mortgages explained: How do they work?
- Why get a guarantor mortgage?
- How do I get a guarantor mortgage?
- Can I get a guarantor mortgage with no deposit?
- Can I be a guarantor for my son or daughter’s mortgage?
- What is a family guarantor mortgage?
- How to get the best guarantor mortgage interest rates
- Can I get a guarantor mortgage with bad credit?
- What are the age limits for a guarantor mortgage?
- Can I get a guarantor mortgage if I’m a first-time buyer?
- How much can I borrow on a guarantor mortgage?
- Can I get a guarantor mortgage anywhere in the UK?
- Guarantor mortgage FAQ
- Who does guarantor mortgages?
- Speak to a guarantor mortgages expert
What is a guarantor mortgage?
A guarantor mortgage can help a borrower purchase a home if they have no deposit or their financial circumstances would normally put a lender off. These agreements require a family member or close friend to act as a guarantor for the mortgage, which means they must step in to make any payments the borrower cannot.
What is the role of a guarantor on a mortgage?
So, what does being a guarantor on a mortgage mean exactly? Well, it means the person who has agreed to be said guarantor may be liable to make any mortgage payments the borrower misses. It also means they will either need to secure the home loan against a property they already own or place a lump sum into a savings account held by the lender – read on for more information about this.
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How do guarantor mortgages work?
If you’re taking out a mortgage with a guarantor, they will need to be named on the title deeds. They will not own a share of the property but must sign a legal agreement to make any mortgage payments if the borrower falls behind. A guarantor for a mortgage may also have to put up security to safeguard the loan.
What security is required from mortgage guarantors?
Based on the lender’s requirements, guarantors for mortgages may have to secure the loan against either…
- A property they own: The lender will hold a charge on the security property, meaning the guarantor of the mortgage could potentially lose it through repossession if the borrower misses too many payments.
- Their savings: The mortgage loan guarantor places a lump sum from their savings into an account held by the lender. They cannot withdraw from this pot for a set number of years or until a certain amount has been paid off the mortgage, although the guarantor’s savings will usually accrue interest.
For further advice on mortgages with guarantors or to get the ball rolling on an application for one, get in touch and a specialist broker with access to the entire market will answer your questions and connect you to the right lender.
Why get a guarantor mortgage?
There are a number of scenarios where mortgages with a guarantor can offer a lifeline to borrowers who would otherwise struggle to find credit. Such as…
- When a borrower has insufficient or no deposit
- They are a first-time buyer
- They have low income
- They want to buy a home they could not afford without support
- The borrower has a poor credit rating
We go into each of these scenarios and how a mortgage guarantor can help in more detail later in this article, but you can always make an enquiry to speak with a residential guarantor mortgage expert over the phone, if you’d prefer.
How do I get a guarantor mortgage?
Getting a mortgage with a guarantor in the UK is no different from applying for any other mortgage product, although you will obviously need to convince a family member or close friend to support your application before you begin. From there, the best course of action is to find a broker with access to every guarantor home mortgage lender on the market. If you do this, you can be certain all of the best guarantor mortgage deals you’re eligible for will be available to you. The advisors we work with are experts in this field and have access to the whole market, so make an enquiry to get the right advice and be paired with the best lender.
Can I get a 100% guarantor mortgage?
Yes, it’s possible to get a 100% mortgage with a guarantor supporting you, if you don’t have a deposit to put down. Some mortgage lenders will offer 100% loan to value (LTV) deals, as long as your guarantor meets their eligibility and affordability requirements (see the section below for more information on this), and has adequate equity in their own property, or savings they are willing to deposit as security. Many borrowers use a guarantor instead of a deposit. In fact, you’re unlikely to get a 100% mortgage with no guarantor as these products aren’t usually offered under other circumstances, although there may be alternative options available for those with a low deposit – make an enquiry to find out what they are.
Can I stand as guarantor for my son or daughter’s mortgage?
We regularly get enquiries from parents and family members asking us “Can I be a guarantor on my child’s mortgage?”. The answer is always that you may be able to support your child’s on parent guarantor mortgage, but most lenders have eligibility requirements for guarantors that you’ll need to meet. Parents acting as guarantors on mortgages typically need to…
- Own their own property: Not a requirement of all lenders but those that do require the property to either be owned outright or they must at least have sufficient equity in it. Some lenders expect a guarantor to own a minimum of 30% of any property they’re putting up as security.
- Have high enough income: The lender will want to see that the guarantor has the means to cover the mortgage payments if the borrower defaults.
- Have a clean credit rating: This will help convince the lender that you’re financially stable and able to step in if the borrower defaults.
Are parental guarantors responsible for 100% of the mortgage?
Most of the time, yes, but it’s not always the case. A parent guarantor on a mortgage may only be responsible for paying a percentage of the debt if their child defaults, depending on the agreement the borrower negotiates with the lender when taking out the loan. Some (but by no means all) mortgage providers would consider lending 100% of a property’s value on parental guarantor mortgages, but allow the guarantor to take responsibility for only a percentage of the loan in the event of a default. Let’s say you’re buying a property worth £100,000 and the lender has agreed that your guarantor will be responsible for clearing 50% of the debt if you’re unable to, the mortgage provider would take a charge of £50,000 on the security property. To speak to an expert about mortgages with parents as guarantors, make an enquiry with us. The advisors we work with can connect you with the lender offering the best deals for a borrower with your needs and circumstances.
What is a family guarantor mortgage?
These work in exactly the same was as deals where parents act as the guarantors for a mortgage. The only real difference is that it might be another family member acting as the borrower’s guarantor, rather than one or both of their parents. Take note, though, some lenders will only allow a parent, grandparent or step parent to act as a guarantor. Others are more flexible and will approve siblings, other relatives and even close friends, but these deals are obviously harder to come by. You should also be aware that some mortgage providers might use the term ‘family guarantor mortgage’ to describe a deal where a parent is the guarantor.
So, can I get a mortgage with a guarantor?
Well, that all depends on whether you have a family member or friend who is willing to take on that role. Both you can your guarantor will need to meet the criteria for guarantors, and you can read about borrower eligibility in the next section.
How to get the best rates on a guarantor mortgage
Mortgage rates often fluctuate and can change at any time, but there’s a way you can ensure that you’ll end up on the best ones available to those using a guarantor. First off, you need to have access to the entire market to make sure the most favourable deals you qualify for are within reach. Secondly, you should try to meet the guarantor mortgage eligibility criteria at as many lenders as possible.
Guarantor mortgage eligibility requirements
Guarantors on mortgages have eligibility requirements that they must satisfy (see the ‘Can I stand as guarantor…’ section for more information), but the borrower themselves often need to meet the lender’s standard mortgage criteria. Most lenders determine affordability and eligibility based on the following factors…
- Income and how the borrower is employed: Obviously, the more you earn, the better; but having a guarantor can offset the risk if the borrower has low income. Those who are self-employed or supplement their income with things like regular bonuses and commission may need a specialist lender.
- Deposit: The minimum deposit requirement is usually 5% for a residential property or 15% for a buy to let. However, having a guarantor means you may not need to stump up any deposit (more on this to come).
- Credit rating: Borrowers with adverse on their file may need to find a specialist lender to ensure they end up with the best rates.
- Age: Some mortgage providers have strict upper and lower age limits.
- The property type: A specialist lender might be needed if the property you’re buying has ‘non-standard’ construction (e.g. thatched roof, timber frame)
- The borrower’s outgoings: Significant outgoings such as other outstanding loans or dependent children can affect the amount you’re able to borrow.
For further information about getting the best guarantor mortgages rates in 2019, make an enquiry and an expert broker will discuss eligibility with you over the phone and connect you with the best lender to fit your needs and circumstances.
Are there guarantor mortgages for customers with bad credit?
Yes, but guarantor mortgage lenders don’t usually treat bad credit any differently to other types of provider. If the borrower’s credit rating is considered too poor for any provider to take on, having a guarantor behind them is unlikely to make a difference. That said, the advisors we work with can connect you to lenders who are more than happy to cater for customers with the following on their file, regardless of whether they’re backed up by a guarantor…
- No credit history
- Low credit score
- Late payments
- Missed mortgage payments
- Debt management schemes
- Payday loans
- Multiple credit problems
While some lenders (mainstream ones, in particular) might offer you unfavourable rates or turn you away entirely if any of the above is against your name, a specialist bad credit provider might take the severity and age of the credit issue into account, as well as how closely you meet their other eligibility requirements. Consult our article on bad credit mortgages for more information.
What are the age limits for a guarantor mortgage?
Some mortgage lenders only accept applicants who are over 21, so a specialist provider might be called for if you’re younger than that. At the other end of the scale, if you’re a senior borrower, certain lenders might be okay with another relative acting as your guarantor – although these deals are more difficult to come by (due to fewer lenders and stricter eligibility) since some providers prefer the guarantor to be a parent, grandparent or step parent. If you’re aiming to borrow into your retirement with the help of a guarantor, take note that some lenders won’t offer mortgages to anyone over 75, others will go up to 85 and a minority will lend to a retiree of any age, under the right circumstances.
What is the maximum age for a mortgage guarantor?
Some lenders also set age limits for a guarantor on a mortgage. At certain providers, they cannot be over 60 but this won’t impact the terms of the loan since the guarantor will not be included on the title deeds. Other providers have no maximum age for the guarantor but may ask that the loan finishes by the time they’re 75-80.
Are there guarantor mortgages for first-time buyers?
Yes, absolutely. In fact, some lenders will only offer you a mortgage with a guarantor clause if you’re a first-time buyer. Certain providers limit these deals to customers who are buying their first home and will not approve them for those who are remortgaging or moving house. Guarantor mortgages are often a good fit for first-timers, who may have limited income or might be struggling to find a deposit.
Can you have a guarantor on a Help to Buy mortgage?
Not usually. Government schemes such as Help to Buy, Right to Buy and Shared Ownership cannot be used with a guarantor mortgage as far as the vast majority of lenders are concerned. However, there may be other options available if you’re struggling to meet a lender’s affordability requirements and qualify for any of these schemes, such as adding another person to the mortgage in the traditional sense. Make an enquiry to speak with an expert about this and the other alternatives that may be on offer.
Are there guarantor mortgages for first-time buyers with bad credit?
Yes! Guarantor mortgages are aimed specifically at first time buyers and some providers may overlook any bad credit on your file as long as your guarantor passes their eligibility and affordability checks. The lending decision may, of course, be based on other factors too, such as the severity of your credit issues.
How much can I borrow with a guarantor mortgage?
Customers often ask us things like “can I get a bigger mortgage with a guarantor?” and “how much extra mortgage can I get with a guarantor?” These are valid questions because a using a guarantor for a mortgage can help you borrow more in two ways. Firstly, 100% loan to value (LTV) deals will be on offer from some lenders, so you could borrow the entirety of the property’s value instead of putting down a deposit. Secondly, certain providers will let you borrow more than a multiple of your income if you’re guarantor passes their affordability checks.
How will a lender calculate how much I can borrow?
If you’re using a guarantor, the lender will use a guarantor mortgage calculator to work out how much you can afford to borrow. They will feed in data such as your income, your credit rating and your guarantor’s financial situation to arrive at a figure, although some lenders use different calculations than others. Most mortgage lenders will offer eligible borrowers a mortgage based on x4 their income, some will go to x5 and a minority x6 under the right circumstances. But if those multiples don’t stretch far enough, the provider might be flexible and lend you more if a friend or close family member has agreed to act as guarantor. For example, if you were eligible for a £150,000 mortgage outright, with a guarantor onside, a lender might be willing to lend you £180,000, although the exact amount of extra capital you qualify for may vary from one provider to the next.
Can I get a guarantor mortgage anywhere in the UK?
Technically, it’s a yes with a few caveats. Guarantor mortgage providers operate all over the UK, but some place postcode restrictions on certain places in Wales, Scotland and Northern Ireland. So guarantor mortgages might be harder to come by in Scotland if the property you’re buying is in the Highlands or off the mainland, for instance. However, there are specialist guarantor mortgage lenders in Scotland, Wales and Northern Ireland who might be able to offer you a lifeline where others can’t.
Guarantor mortgage FAQ
Here you’ll find additional information about using a guarantor to secure a mortgage or acting as one, based on the most frequently asked questions we hear on the topic.
Does having a guarantor help get a mortgage?
It can help if you are struggling to get a mortgage because you have either an insufficient deposit or your income doesn’t stretch far enough to pass the lender’s affordability checks. With a guarantor behind you, a lender might be willing to offer you a mortgage based on 100% of the property’s value or let you borrow more.
Can parents act as guarantors for mortgages?
Absolutely. Parental guarantor mortgages are the most common type, and you can find full information about this in the section titled ‘Can I stand as guarantor for my son or daughter’s mortgage?’
Who else can be a guarantor for a mortgage?
Some lenders won’t allow anyone who isn’t a parent, grandparent or step parent to act as a guarantor, but other lenders are more flexible and might consider any other relative or a close friend, as long as they pass the eligibility checks.
Are there guarantor mortgages for over 70s?
In theory, yes. Although some lenders will only accept parents, grandparents or step parents as guarantors, others are more flexible and may consider allowing other family members or a close friend to act as a guarantor for an elderly borrower. Be aware that some lenders impose age limits for all mortgages and won’t cater for anyone over 75. Other go up to 85 and a minority will demand no upper age limit if they’re confident you can continue paying the mortgage during retirement. If you are an older borrower looking to use a younger guarantor, perhaps to help with affordability in borrowing money on a property you own, it may be more sensible to consider equity release. Go to our dedicated section for more information on this.
Can I borrow more on my mortgage with a guarantor?
Some lenders will allow this, yes. A number of providers will offer 100% LTV deals to borrowers who are using a guarantor, and others may allow you to borrow a larger amount if your income doesn’t stretch far enough to cover the mortgage. See the ‘How much can I borrow with a guarantor mortgage?’ section for more info.
What is the minimum house deposit for a mortgage with a guarantor?
Technically speaking, there’s no minimum since 100% mortgages are available from some lenders if you’re using a guarantor.
Does being a guarantor affect me getting a mortgage?
Customers occasionally ask us does being a guarantor affect my ability to get a mortgage? And this is certainly a valid question. The act of becoming a guarantor will not usually impact on your credit rating. This will only be affected if the borrower defaults and you’re unable to pay the debt for them. But does being a guarantor affect a future mortgage application you might make? There’s some risk of this in the sense that your guarantor duties will be taken into account when your affordability is being calculated in the future, which may reduce the amount you can afford to borrow even though you are not technically making any payments, regardless of how well conducted the mortgage is by the owner. If this is something you’re concerned about, get in touch and the guarantor mortgage experts we work with will discuss any risks in detail.
Should I take out insurance if I’m acting as a guarantor?
A guarantor on any home mortgage loan might want to consider taking out income protection insurance to ensure they are covered in the event of the borrower defaulting and the guarantor being unable to cover the debt due to things like illness, injury or redundancy. It may also be a good idea to convince the borrower themselves to consider similar cover. If you have any concerns about this, make an enquiry and an expert advisor will discuss the risks in depth and suggest ways you can safeguard yourself.
Can I get a self-employed mortgage with a guarantor?
Yes, there are guarantor mortgages for self-employed borrowers, but a specialist lender might be needed to ensure you end up on the most favourable rates. The way lenders treat self-employed income, including the amount of it you can declare and how long they need you to have been trading for can vary across the board, so it’s important that you find the lender with the most accommodating approach to your specific employment setup. Having a guarantor can help you get a mortgage with no deposit and borrow more than you could otherwise afford, but specialist advice from a whole-of-market broker is what will help you find the best rates for someone who’s self-employed. Consult our page on self-employed mortgages to find out more or make an enquiry.
How long does a guarantor stay on a mortgage?
Your lender decides this and you will not be able to remortgage to a non-guarantor deal until they give you the go-ahead. A guarantor would usually stay on the mortgage for an agreed number of years or until a specific about of the debt is paid. If you miss any repayments, this term can be extended by the lender.
How many guarantors can you have on a mortgage?
The maximum number of guarantors most lenders will accept on a mortgage is two, and the majority of providers will insist that they are the parents, grandparents or step parents of the borrower.
How do I remove a guarantor from a mortgage?
We occasionally hear from customers who want to know how to take a guarantor off a mortgage early, and how easy it is depends on your lender’s stance and policies. Whether you’re successful in removing your guarantor (assuming they’ve agreed to be removed) might come down to why you want to cut this tie. You will need to convince the lender that you have a legitimate reason, such as your financial situation changing for the better or the guarantor passing away. If you open talks with your lender and tell them you wish to remove your guarantor, they likely offer you one of the following options, depending on the circumstances…
- They will let you remove the guarantor altogether
- They will expect you to replace the guarantor with another
- They will ask you to pay off the loan or refinance it
- If your guarantor has died, they may allow you to use some of their estate to pay off part of the mortgage
- They will reject your request and refuse to allow you to remove the guarantor or change the terms of the loan
For specialist advice on removing a guarantor from a mortgage, make an enquiry today. Even if your lender has refused this request, there may be alternative options available, and the brokers we work with can go over them with you.
Can I get a guarantor mortgage with 95% LTV
This is certainly possible, providing you and your guarantor pass the lender’s checks. You would take out a 95% LTV guarantor mortgage if you had a 5% deposit and a provider who accepts this amount as minimum. Since the deposit would be taken care of, having a guarantor on the mortgage would help you pass the affordability checks for the loan itself, or enable you to borrow more than you would alone.
Can I get a student mortgage if I have a guarantor?
Specialist lenders have been known to offer students a mortgage on the condition that they have a guarantor. As students often have limited or no income in the traditional sense, this often means asking the guarantor to take responsibility for 100% of the debt, which is possible, as long as the guarantor is eligible. It is possible to get a guarantor mortgage without the borrower providing any proof of income, with the eligibility and affordability checks falling solely on the guarantor. This gives student borrowers a potential path to the property ladder, but an expert broker with access to the entire market is essential in these niche situations.
Can I get a guarantor on a second mortgage?
It’s possible in theory, but your choice of lenders will be restricted as many providers only offer guarantor mortgages to first-time buyers.
Is a guarantor mortgage the same as a springboard mortgage?
Yes! Some lenders have a different name for these products, calling them either ‘family mortgages’ or ‘springboard mortgages’ but they’re the same thing.
Who offers guarantor mortgages in 2019?
Some of the UK’s mainstream lenders, including banks and building societies, will consider offering guarantor mortgages under the right circumstances. Specialist lenders who cater for niche borrowers with things like bad credit against their name can also provide these products. In other words, the market is vast, so specialist advice from a broker with access to the whole market is a must.
Why seeking specialist advice is so important
It’s important to have access to the whole of the market to make sure you’re paired up with the right lender based on your needs, goals and circumstances. Approaching a mainstream provider isn’t always the best option, for a number of reasons. For example…
- If you were to approach Halifax for a guarantor mortgage, you would be turned away as this bank withdrew guarantor mortgages back in 2010.
- Guarantor mortgages are also not available through Natwest.
- Santander does not offer guarantor mortgages
- HSBC does not offer guarantor mortgages
- Virgin Money does not offer guarantor mortgages
- Lloyds no longer offer guarantor mortgages
- Nationwide guarantor mortgages usually come with strict underwriting criteria and a capped loan to value (LTV) ratio of 85%
- Barclays’ take on a guarantor mortgage is a family springboard deal which requires the guarantor to place a 10% deposit in a savings account, which won’t help you out if your guarantor only has a 5% deposit to contribute or your income is low.
- Aldermore guarantor mortgages require the guarantor to be no older than 70 at the end of the guarantee period – a specialist lender may have a more flexible approach to age requirements.
Given that you will encounter restrictions at some of the UK’s mainstream lenders or will be turned away by default, finding a broker with access to the whole market who can compare guarantor mortgages and connect you to the right provider is the best course of action. Make an enquiry to speak with one today.
Speak to a guarantor mortgages expert
If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here. Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.