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A guarantor mortgage is a type of mortgage that enables aspiring homeowners to secure a loan with the help of a guarantor to boost their borrowing capacity. The typical customer for a guarantor mortgage is someone whose income is not yet high enough to obtain the mortgage amount needed when taking the lender’s income multiples into account.
A guarantor is typically a parent but could also be a spouse, family friend, grandparent or other relative. Who is accepted as a guarantor varies depending on the lender.
As with any standard mortgage, you will need to have a deposit ready. However, in some cases, a lender can take a charge over the guarantor’s property instead. A repayment mortgage will typically be arranged instead of an interest-only mortgage, as most guarantor mortgages are used by first-time buyers.
The lender will assess affordability in a similar way to a standard mortgage, although they will need to factor in the running costs of the guarantor’s home and the property being purchased. Similarly to a standard mortgage, all applicants are joint and severally liable for the mortgage so it will show on all credit files and all applicants are responsible for maintaining payments.
Please remember that your home may be repossessed if you do not keep up repayments on your mortgage.
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To start your mortgage journey with Private Finance, you can reach us at 0800 980 8777 or via email at info@privatefinance.co.uk to speak with one of our mortgage constultants.
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From over twenty years of experience arranging mortgages of every kind, our consultants have deep expertise in the finer points of the mortgage market.
Here are some of the reasons that our clients trust us with their mortgage needs:
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There are high street lenders and regional building societies who will provide guarantor mortgages. However, researching the market alone could lead to missed opportunities and potentially less favourable terms. The best way to discover which lender could lend to you and who is the most appropriate for your unique circumstances is to speak with an experienced independent and whole-of-market mortgage broker. They have access to the whole of the market and can guide you effectively toward the lender and mortgage product that aligns best with your specific circumstances.
The amount you could borrow with a guarantor mortgage varies depending on factors such as you and your guarantor’s income and outgoings, credit history, and the specific criteria set by the lender, similar to a traditional mortgage. A guarantor mortgage may allow you to borrow a larger sum compared to what you could secure on your own, as the presence of a guarantor can reduce the risk, and evidence additional affordability for the lender.
Yes, having a guarantor could enable you to secure a larger mortgage, especially if you might have faced challenges meeting the borrowing capacity on your own. By providing additional security or evidencing additional income to the lender, a guarantor could make it possible for them to be more flexible with the loan amount they offer, which can be particularly advantageous in situations where the borrower’s financial circumstances might otherwise limit their borrowing capacity.
Yes, first-time buyers can have a guarantor for their first mortgage. A guarantor mortgage is helpful for those individuals who may not meet the standard lending criteria such as having too low of an income. This scenario is likely for a younger first-time buyer. Having a guarantor can help these individuals secure a mortgage and buy their first home.
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