Who Can Be a Mortgage Guarantor?

If you’re considering a guarantor mortgage (sometimes referred to as a family or springboard mortgage), you’ll no doubt be wondering who can be a guarantor.

This article will examine who can be a mortgage guarantor, what criteria they’ll need to meet, and how a broker can help you find a suitable lender.

Can a family member be a guarantor for a mortgage?

Yes, they can. In fact, many lenders prefer this, and some restrict guarantors to close family members exclusively. This improves their confidence that there won’t be issues with the agreement further down the line, as relationships with parents and grandparents are generally considered the most reliable and trustworthy.

Depending on the lender, however, it’s possible to be a guarantor if you’re related to the applicant in any of the following ways:

• Parent
• Grandparent
• Sibling
• Aunt or uncle
• Cousin
• Any other close blood relative

What about friends and non-blood relatives?

All lenders have criteria concerning who can act as a guarantor for you.

High street lenders can be more restrictive, but there are specialist lenders who would potentially accept a variety of people who are not considered close family members or blood relatives, such as:

• Adoptive parents
• Stepparents
• Your spouse (providing they have a separate bank account from you)
• Distant relatives, such as great-uncles and aunts
• Second or third cousins
• Friends
• Colleagues

Effectively, anyone with whom you have a solid and trusting relationship and who is also financially stable could potentially be a guarantor; it’s just a case of finding a lender who is open-minded about the guarantor’s relationship with the borrower.

How a broker can help with a guarantor mortgage

In this niche of the mortgage industry, there tend to be far fewer lenders available, largely because many of them removed their guarantor mortgages from the market when the help-to-buy scheme became available. If your guarantor happens to be a non-blood relative, this will narrow down your choice even further.

The good news is, the brokers we work with have access to every mortgage lender on the market. They’ll be able to match you with a more flexible lender who will consider guarantors more openly, and help ensure that you secure the funding you need and get the best deal possible.

How old can my guarantor be?

This can vary from lender to lender, and whilst high street lenders often have restrictions on both the maximum and minimum age that a guarantor can be, specialist lenders may be willing to consider guarantors up to the age of 85.

There are even a handful that have no upper age limits for applicants or guarantors, although you’ll likely need to go through a broker who specialises in guarantor mortgages to access them.

Some lenders will want the mortgage to be repaid in full prior to the guarantor’s retirement. If your guarantor is approaching retirement age, the length of the mortgage term available to you is likely to be restricted, and your lender options will be even more narrow.

Reverse Guarantor

A reverse guarantor is younger than the mortgage applicant, and certain lenders will look at this type of arrangement, for example, a child guaranteeing their parents’ mortgage. Where this is accepted, a minimum age limit or maximum LTV (loan-to-value) may be applicable.

Although a reverse guarantor is certainly a possibility, older borrowers who are struggling to meet the affordability criteria do have other options available to them, such as a lifetime mortgage.

Other criteria for guarantors

In addition to their relationship to the applicant and age, guarantors must meet some other criteria to satisfy lenders.

These can vary slightly from one lender to the next but generally include:

• Security: The vast majority of lenders require guarantors to be homeowners; however, not all lenders will insist that they own their homes outright. Some lenders will consider homeowners with a specific level of equity in their homes. The exact percentage of equity required can vary from one lender to the next and can be as wide-ranging as 30%- 70%.

Some lenders will consider a guarantor’s savings rather than property to secure the loan, although this is typically offered by more specialist lenders. It may also be offered specifically for JBSP (Joint Borrower Sole Proprietor) mortgage applications. A JBSP mortgage is a similar, more modern alternative to a guarantor mortgage and is now many lenders’ exclusive product of this type.

• Financial stability: All lenders will expect the guarantor to prove that they are financially stable. Generally, it won’t matter whether their income is from employment, self-employment, or savings so long as it is provable. In some cases, retirees will be able to use their pension as proof; however, only specialist lenders are likely to accept retired guarantors.
• Affordability of the repayments: Some lenders expect the guarantor to be able to support 100% of the loan repayments for the entire duration. However, some will be satisfied if a minimum percentage is covered; 70% is typical. If they still have mortgage repayments on their own homes, they must prove that they can afford both loans simultaneously.
• Strong credit score: There isn’t a specific score requirement, but each lender will have their interpretation of what they consider a good enough credit history to support a mortgage in this way. It’s unlikely that those with a no credit history or severe bad credit will be able to act as a guarantor.
• Proof of legal advice: If you’re planning to be a guarantor, it’s essential that you take the relevant legal advice and fully understand the level of risks involved. Some lenders expect you to provide documented proof that you have taken this advice.

Can you be a guarantor for more than one mortgage?

Not really. You can support a joint mortgage with two applicants so long as the lender deems your relationship to one of them acceptable, i.e., if they need you to be family.

In most cases, however, individuals can only guarantor one loan at a time, especially if it’s a high-value loan such as a mortgage. As soon as the term ends or your minimum commitment to that agreement is met, you will be free to act as a guarantor for another person or loan.

Get matched with a guarantor mortgage specialist

Guarantor mortgages present a great option for helping someone you care about afford their own home. However, the criteria that individuals need to meet to perform this function are typically stringent, in some cases more so than they are for the applicant. It’s therefore important to apply for a guarantor mortgage with the ideal lender for the circumstances of both the borrower and the guarantor.

Finding the right lender in this situation can be tricky, especially if your guarantor is not an immediate family member. The brokers we work with have expert knowledge in this area and will be able to recommend a lender that can help you, no matter your relationship with your guarantor.

Our broker-matching service will pair you with one of these experts, who can get the ball rolling for you immediately. There’s no obligation to take things further, meaning you won’t pay anything if they’re unable to secure you a mortgage. Call now on 0330 818 7026 or enquire, and we’ll match you with your ideal guarantor mortgage advisor for a no-obligation chat today.