A guarantor mortgage is a home loan where a family member — usually a parent — agrees to guarantee the mortgage by putting up their savings or property as security. The guarantor does not own any share of the property but is legally liable if the borrower misses payments.
What Is a Guarantor Mortgage?
A guarantor mortgage is a type of mortgage where a family member (usually a parent or grandparent) agrees to cover your mortgage payments if you can't. This reduces the lender's risk and can help you:
- Buy with a smaller deposit (or no deposit at all)
- Borrow more than you could alone
- Access better interest rates
The guarantor doesn't go on the property's title deeds — the home is 100% yours. But they are legally responsible if you default. Understanding affordability is crucial, as both borrower and guarantor are assessed.
How Guarantor Mortgages Work
There are two main types:
Savings-Based Guarantor Mortgages
The guarantor deposits a sum (typically 10–20% of the property value) into a savings account linked to the mortgage. The savings are held for a set period (usually 3–5 years) and returned with interest once the borrower has built enough equity.
Property-Based Guarantor Mortgages
The guarantor uses their own property as additional security. A charge is placed on the guarantor's home, meaning the lender can claim against it if the borrower defaults. This is higher risk for the guarantor.
Risks for Guarantors
Being a guarantor is a significant financial commitment:
- Liability: If the borrower misses payments, the guarantor must pay. If neither pays, the lender can pursue the guarantor's savings or property.
- Credit impact: The guarantee appears on the guarantor's credit file and may affect their ability to borrow.
- Locked savings: For savings-based products, funds are typically locked for 3–5 years.
- Relationship risk: Financial arrangements between family members can strain relationships.
Independent legal advice for the guarantor is strongly recommended — and some lenders require it.
Alternatives to Guarantor Mortgages
- Gifted deposit: Parents gift money for the deposit with no ongoing obligation.
- Joint Borrower Sole Proprietor (JBSP): Parents are on the mortgage (boosting affordability) but not on the title deeds. Avoids the stamp duty surcharge on additional properties.
- Shared ownership: Buy a share of a property with a smaller deposit.
- 95% LTV mortgages: If you can save a 5% deposit, many mainstream lenders offer competitive 95% LTV deals without needing a guarantor.
Get Fee-Free Advice
Guarantor mortgages are specialist products and not all lenders offer them. Our fee-free advisors know which lenders have the best guarantor deals and can guide both you and your guarantor through the process.
Frequently Asked Questions
- Can anyone be a guarantor for a mortgage?
- Most lenders require guarantors to be close family members (parents, grandparents). They must be UK residents, have a good credit history, and have sufficient income or assets. Some lenders have age limits for guarantors.
- Can I get a 100% mortgage with a guarantor?
- Some guarantor mortgage products do offer up to 100% LTV, meaning you don't need a deposit. However, you'll still need to cover buying costs like solicitor fees, stamp duty, and surveys.
- How long does a guarantor stay on the mortgage?
- Typically 3–5 years for savings-based products. Once you've built enough equity (usually reaching 80% LTV), the guarantee can be released and the guarantor's savings returned.
- Does being a guarantor affect my credit score?
- Yes — the guarantee appears on your credit file and is factored into affordability assessments. If the borrower misses payments, it will also affect your credit rating.
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