Guarantor & Family mortgages

Helping families to help each other

Guarantor mortgages are one way that we help families to help each other with property purchases. These can be arranged in a number of different ways, and we provide these on both an interest-only and capital repayment basis. Examples of how we work with families include:

  • 'Traditional' guarantor mortgages: For circumstances where the borrower may not have built up a significant credit history, typically because of their age, parents or other family members can 'guarantee' the mortgage for the borrower, with the borrower evidencing they can afford the repayments out of their own income
  • 'Enhanced contribution' guarantor mortgages: Where a borrower is looking to purchase a property that they would not be able to afford from their own income, but other family members can provide a guarantee along with a commitment to 'top-up' the borrower's income to evidence affordability
  • Multi-family guarantor mortgages: Where two or more individuals are looking to purchase a property together, but the mortgage requires either a guarantee or additional contribution from more than one family
  • Sibling guarantor mortgages: Where brothers/sisters are looking to purchase a property together, and parents or other family members are required to guarantee the mortgage or provide supporting contributions or a combination of both
  • Releasing equity from existing property: Though not a guarantor mortgage, one way that clients can look to achieve their goals is to release equity from an existing property, typically the parental home, to provide a deposit for a child or grandchild
  • Multi-party mortgages: Again, while not a guarantor mortgage, this approach allows parents or other family members to be a named 'party' on the mortgage so that their income can be used to assess affordability. This allows clients to borrow at higher levels, with a view to the parents (or other relative) coming off the mortgage once their income increases to evidence affordability on their own

If you would like to hear more about any of these, or discuss your own personal circumstances, please do get in touch.

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.

Guarantor Mortgage FAQs – For the Guarantor

"What does a mortgage guarantor do?"

“Guaranteeing” a mortgage can take several different forms, as demonstrated in the table above. You might simply be seeking to ‘guarantee’ the mortgage payments, or you might be looking to support the guarantor with a commitment to regular contributions towards the mortgage. In any circumstance you will be taking on personal responsibility for the mortgage, so it is an important commitment.

"Can a mortgage guarantor be retired?"

In short, yes. However, if you are guaranteeing a mortgage for someone else you will need to be able to demonstrate how you can meet that commitment, without putting yourself into any financial difficulties.

"Is there an age limit for being a mortgage guarantor?"

No, there is no formal age limit for being a mortgage guarantor, but any lender will look at your circumstances and should discuss with you how you could meet the mortgage commitment should the named borrower experience difficulties.

"With guarantor mortgages, when can you remove the guarantor?"

Many people look to get on the property ladder as soon as possible after starting employment. In these early years, income can grow steeply, but this income growth is seldom guaranteed. Borrowers can achieve higher levels of borrowing if this borrowing is backed by a guarantor, and once their income has grown to the point that they can meet the affordability requirements for the mortgage, the guarantor is no longer required. When arranging the guarantor mortgage, the plans for ending the guarantee can be discussed with the lender, so that this plan is agreed by all participants. There is no minimum amount of time that a guarantor is required

Guarantor Mortgage FAQs – For the Borrower

How much can I borrow with a guarantor mortgage?

Everyone’s circumstances are unique, so you will need to discuss this with a qualified mortgage lender, such as one of our bankers. The answer will depend on your income, what contributions (if any) the guarantor will be making to the mortgage payments, any other properties you or the guarantor own, and a review of both of your financial circumstances. That said, the reason why people opt for a guarantor mortgage is so that they can borrow more than they would otherwise be able to without one.

Can I get a guarantor mortgage if I do not have a deposit?

Any lender will normally prefer for you to have a deposit, but there are other ways that borrowing can be agreed if this is not possible. For example, if your guarantor has cash savings that they are prepared to leave on deposit with your mortgage lender, this can be taken into account. Alternatively, if your guarantor owns a property outright then security can be taken against this property in addition to the one being mortgaged, which effectively acts as a deposit – although clearly this property then becomes subject to repossession if mortgage payments are not met, so it is a big decision.

Can I get a guarantor mortgage if I am not a first time buyer?

Yes, whether you are a first time buyer or are moving from an existing property to another, you can see if a guarantor mortgage might be right for you, and your guarantor.

Can students get a guarantor mortgage?

Yes. Typically, guarantor mortgages for students are part of a property investment strategy where parents are seeking to support a child at university by purchasing accommodation for them. 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.

Do you have a guarantor mortgage calculator?

Guarantor mortgages are all unique, as there are numerous factors that the borrower and the guarantor can consider when looking to borrow funds. Given these different options, we would always recommend that people seeking a guarantor mortgage talk to a professional mortgage lender, such as one of our bankers, who can help them achieve the best solution for their individual circumstances.

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