If you are unable to buy the home you want with a normal mortgage, a guarantor could help you get accepted or borrow more. Here is how they work and how to get one.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Guarantor mortgages can help you buy a home even if you have no deposit or your financial circumstances would usually put lenders off.
You need someone to be named on your mortgage as the guarantor. They have to cover your repayments if you cannot make them and could even risk losing their own home.
You can compare guarantor mortgages here. This comparison includes mortgages you can get without a deposit or with a small deposit.
Some lenders may call them family or springboard mortgages.
Your guarantor will not own a share of the property you buy or be named on the title deeds. They have to sign a legal agreement to make your repayments for you if you fall behind and let the lender use one of the following as security:
Their own home: The lender holds a charge on their property, which means they could repossess it if you missed too many repayments.
Their savings: They put a lump sum into a savings account held by your lender. They cannot withdraw it for a set number of years or until you have paid off an agreed amount of your mortgage, although they usually earn interest.
No, some of them are available with a loan to value (LTV) of 100%. This means the mortgage covers the entire purchase price of your home and you do not need a deposit.
Lenders decide when this can happen, and you cannot remortgage to a deal without a guarantor until they let you.
They can choose a number of years before your guarantor can be removed or until you have paid off a certain percentage of your mortgage. This term can be extended by the lender if you miss repayments.
Lenders may be able to accept your application if you have a guarantor even if:
You have no deposit
You have a small deposit
You are a first time buyer
You have a low income
Your credit record means most mortgage lenders would reject you
You want to buy a home that costs more than lenders think you can afford
Yes, some lenders offer guarantor mortgages if you already own a home, for example if you are moving to a more expensive property.
However, they are usually aimed at first time buyers, so some are not available as remortgages or for moving house.
A family member or even friend can be your guarantor, but some lenders will restrict who you can choose. For example, some lenders only accept a parent, grandparent or step parent as your guarantor.
Your guarantor will also need to:
Own their own property outright or have enough equity in it to meet the lender's minimum. For example, they may need your guarantor to already own at least 30% of their home.
Have a high enough income to help cover your repayments if needed, while still being able to keep up with their own mortgage repayments and spending
Have a strong credit record so the lender is satisfied they are financially stable.
Get legal advice during the application process because many lenders need to see proof of this before the purchase can take place.
They can read about the risks of being a mortgage guarantor here.
Some mortgages now only make your guarantor responsible for covering some of what you owe.
For example, some let you borrow 100% of the property's value but only make your guarantor responsible for 25% of this if you fail to pay it. In this case, if you bought a property worth £200,000, the lender will only need a charge on your guarantor's property of £50,000.
The amount you can borrow will depend on your financial circumstances. However, guarantor mortgages can help you borrow more than normal deals in two ways:
Some deals let you borrow up to 100% of the property's value, which means you need no deposit. This can help you get on the property ladder without having to wait until you have saved a deposit, which could take years.
Some buyers can struggle to get a mortgage because their income is not high enough. This means the lender will not agree the buyer can afford the property they want.
Including your guarantor's income in their calculations means they could agree to lend you more than you would get if you applied alone.
For example, a lender could normally only offer you a mortgage for a property worth £150,000, but with your guarantor they could let you get one for up to £180,000.
Here is how to make sure you will be able to afford the mortgage's repayments
Guarantor mortgages come with all the same costs as normal mortgages, including:
Paying back the full amount you borrow
Fees for taking out the mortgage
Broker or mortgage adviser fees
Here are the the fees that can come with mortgages and how to check if you can afford them.
Lenders all have different ways of dealing with missed repayments, but they could do the following:
Give you more time to make your repayments
Charge a fee
Ask your guarantor to make the repayment for you
If you fall further behind with your repayments, the lender could:
Extend the period your guarantor cannot withdraw from their savings account attached to the mortgage
Take some of the money in your guarantor's savings account
Eventually repossess your house to get back what you owe them
If you still owe them money after they have sold your property, they could even repossess your guarantor's home
You and your guarantor can read about the risks of being a mortgage guarantor here.
Lenders have different policies on what happens next. Some will need you to add a new guarantor to the mortgage or let your guarantor's estate pay off some of your mortgage instead.
Check the terms and conditions or ask the lender before you apply.
You can find one using our guarantor mortgages comparison.
Check the lender's terms and conditions to see if you are allowed to apply for their guarantor mortgages. This can depend on:
Your age, as some mortgages only accept applicants over 21
Where you live, as some deals are only available to borrowers in England and Wales or in Scotland
Your income, outgoings and credit record, which affect if you can afford the repayments
If you have a deposit, although many guarantor mortgages are available with no deposit
If you are a first time buyer, because some deals are only available for your first ever property
If the property will be your main residence, as most deals are not available for second homes or property you want to rent out
Most guarantor mortgages are only available if you and your guarantor get advice as part of the application process from:
A solicitor, who can explain the legal implications to you both
A mortgage adviser or broker, who can also help you find the right deal
You need to prove that you got advice from either or both of them, depending on your lender's rules.
If they are not right for you or you cannot find anyone willing to be a guarantor, you may be able to get a mortgage even if you have a small deposit.
If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.