Family (Guarantor) mortgages

Guarantor mortgages

A Family or Guarantor mortgage, offers a useful way for families to help family members make a property purchase. Borrowers who are unable to demonstrate affordability on their own, perhaps due to their age or credit history, or because their current income or assets are insufficient, can use this vehicle to receive support from a family member.

There are a number of different ways to arrange a Family Mortgage including:

Traditional guarantor

The borrower evidences they can afford the repayments from their own income but may not have built up a sufficient credit history, perhaps due to their age. Parents or other family members can 'guarantee' the mortgage for the borrower.

Enhanced contribution guarantor

Where a borrower is looking to purchase a property that they would not be able to afford from their own income, other family members can provide a guarantee along with a commitment to 'top-up' the borrower's income to evidence affordability.

Multi-family guarantor

Where two or more people are seeking a mortgage and require either a guarantee or additional contribution from more than one family.

Sibling guarantor

Where siblings are purchasing a property together, parents or other family members can guarantee the mortgage, or provide contributions, or both.

Release equity from an existing property

Though not a guarantor mortgage, clients can release equity from an existing property, typically the parental home, to provide a deposit for a child or grandchild.

Multi-party mortgages

Parents or other family members can be a ‘named party’ on the mortgage so that their income is used to assess affordability. This allows for higher levels of borrowing than might otherwise be the case. The named party can be removed from the mortgage once the borrower’s income increases to evidence affordability on their own.

Frequently asked questions - for the Guarantor

As a mortgage guarantor, you are committing to take on responsibility for the mortgage in the event of any payment shortfall by the borrower. The borrower may rely on this mortgage guarantee to demonstrate affordability of a loan that they would not otherwise be able to afford, or for support to pay the regular mortgage contributions.

Yes, you can be the guarantor of a mortgage even if you are not working. We will consider your finances and individual circumstances to ensure you have the income or assets necessary to meet the mortgage commitment without putting yourself into any financial difficulties.

No, there is no formal age limit for being a mortgage guarantor. We will consider your finances and individual circumstances to ensure you have the income or assets necessary to meet the mortgage commitment without putting yourself into any financial difficulties.

No, there is no minimum amount of time that a guarantor is required. The guarantor can be removed from the mortgage once the borrower’s income has grown to a level sufficient to demonstrate the affordability requirements of the mortgage.

When arranging a guarantor mortgage, the plans for ending the guarantee can be discussed with your banker so that a plan is agreed by all participants.

Yes. Guarantor mortgages may form part of a property investment strategy where parents provide support to a child by purchasing accommodation while they attend university. Frequently this is a house or flat with multiple bedrooms and so becomes a ‘House in Multiple Occupation’ (HMO), for which there are further considerations, including a licensing requirement. This would be discussed with your banker.

Frequently asked questions - for the Borrower

People typically opt for a guarantor mortgage so that they can borrow more than they would otherwise be able to. The amount you can borrow will depend on your and your guarantor’s individual circumstances. Your banker will discuss this with you and the guarantor to understand your finances, any other properties you or the guarantor own and what contributions, if any, the guarantor will make to the mortgage payments.

Having a deposit is preferable, however it is possible to agree borrowing without one. For example, cash savings left on deposit with us by your guarantor could be considered as an alternative. Or if your guarantor owns a property outright, security could be taken against this property in addition to the one being mortgaged. This would effectively act as a deposit and the property would become subject to repossession if mortgage payments were not met.

No. Whether you are a first-time buyer or are moving from an existing property to another, you may be able to secure a guarantor mortgage.

Yes. Often, guarantor mortgages are part of a property investment strategy where parents provide support to a child by purchasing accommodation while they attend university. Frequently this is a house or flat with multiple bedrooms and so becomes a ‘House in Multiple Occupation (HMO), for which there are further considerations, including a licensing requirement. This would be discussed with your banker.

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All borrowing is subject to status and is available to persons of 18 or over. Security might be required for borrowing in the form of a charge or standard security over land, or other forms of security over your investments or other assets.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.