Guarantor Mortgages: How They Work and Who Can Be a Guarantor

Are you feeling priced out of the UK housing market? With rising market prices in the United Kingdom, stepping up on the property ladder is becoming impossible. Guarantor Mortgages help first-time buyers overcome deposit hurdles by letting a family member or a friend take responsibility for their repayments. After you make a purchase, Property Management Company offers expert support to help you manage your properties efficiently.

What is a Guarantor Mortgage?

A guarantor mortgage, also called a family-backed mortgage, is a way in which a family member or a relative agrees to repay your loan or increase your affordability on shared responsibility for your loan.

The guarantor’s role is to act as backup in case you cannot make your monthly repayments. 

Who can get a Guarantor Mortgage?

The Eligibility Criteria of the mortgage loan on a guarantor  for borrowers depend on several conditions as follows:

1. First-Time Buyers, with small or no deposit, generally apply for a mortgage with a guarantor. It is not possible to secure a mortgage with less than 5 per cent of the deposit without a guarantor. 
2. People with a low income might struggle to get a mortgage without a guarantor or a higher deposit. Lenders often calculate the maximum mortgage by multiplying your gross annual income by a set factor, which is usually 4.5 times. 
3. Without a credit score or with a low credit score, it is nearly impossible to secure a mortgage alone. In this case, a guarantor with credit can assure the lenders that they require before approving a loan.

4. If the lenders think that you are buying a high-value property that exceeds your affordability limit, a guarantor loan can help you secure more funds with the commitment of monthly repayments.

What is a Guarantor on a Mortgage, and Who Can Be the One?

Lenders use a relative or friend as a guarantor to repay the loan if you are unable to pay. They agree in the guarantor covenant to repay the loan in case of any missed payments or no payments from the primary borrower. They may be parents, grandparents, other close family members, or a close friend. The guarantor requirements are given below:

1. The loan guarantor should be at least 21 years of age.
2. The lender requires the guarantor to own their home outright and have a high level of equity.
3. An income to cover the repayment amount if required.
4. A strong credit score
5. The lender also requires the gurantor mortgage age limit, and because mortgages typically last for 25 years, they need a guarantor who may survive this fixed term.
6. They must take legal advice before agreeing to act as a guarantor.

How Do Guarantor Mortgages Work According to Types?

Various types of mortgages with a guarantor work under different criteria. Here, we are going to cover the main types that are common.

Income as Security/ Income Boost

It is also called an Income Boost or Joint Borrower Sole Proprietor Mortgage, which works by adding some or all family members or a friend’s income to your own to increase your total income. As a result, you can borrow more for a mortgage because the combined income will be higher. 

In this type, your relative or a loved one agrees to be jointly responsible for the mortgage repayments, but still will be the sole owner of the property you buy. The guarantors will not be listed in the property agreements or deeds. This means any stamp duty relief you would qualify for as a first-time buyer remains unaffected.

Note: As long as you make your monthly payments, your guarantor does not need step in to help. But if you miss your payments, your guarantor will legally be obliged to pay.

Savings as Security Mortgage

The second mortgage type is saving as security on a mortgage, also known as a springboard or family guarantor mortgage. Your guarantor will add 10% of the home buying price to a savings account with the lender for a fixed number of years. If you don’t make sure your payment is made each month, the money will not be returned to the guarantor.

As a buyer, you can choose to reduce the deposit up to 9.9% or avoid a deposit altogether. As long as you make your monthly repayments, at the end of the fixed term, your guarantor will get back their deposit, adding any interest that has accumulated. 

Property as Security Mortgage

It is the type of mortgage in which the guarantor uses their property as security in case they have a large amount of equity in a property. The guarantor agrees that their property will be used as collateral if the buyer is unable to pay.  It can be risky for a guarantor to offer their property, so it has limited options available.

Gifted Deposit Boost

This type of mortgage involves releasing money from their home to gift you as a deposit or to add to your current pot. It works by setting up two mortgages, as a first-time buyer, for a smaller mortgage for your guarantor. A family member can use a small mortgage on their home to release funds, which can be gifted to you. With a larger deposit, you may get better mortgage rates or afford a pricier property. 

Which Lenders Offer the Best Guarantor Mortgages in 2026

The most popular lenders across the UK include:

1. Barclays Guarantor Loan
2. Nationwide Guarantor Mortgage
3. Natwest 
4. Gen H
5. Skipton Building Society
6. Leeds Building Society
7. Aldermore
8. The Loughboroughs Building Society
9. Cambridge Building Society
10. Cumberland Building Society

Availability and criteria of each may vary, so independent advice is recommended.

Pros and Cons of Guarantor Mortgages

Pros	Cons
It enables first-time buyers with a low income to qualify for a home loan	If the borrower fails to pay the loan,  guarantors’ assets may be at risk.
It allows a high borrowing amount asThe guarantor’s income is also considered	Money or debt issues sometimes result in strains between family members
The approval of the loan with a guarantor is generally easy	Everybody does not have a potential guarantor in the closed ones
It typically avoids Lender Mortgage Insurance.	Guarantor loans come with legal obligations that must be followed
This mortgage allows you to build a good credit history by repaying it on time.
The loan is approved at a lower interest rate due to the guarantee of a closed one.

What Must Be Considered Before the Approval of a Guarantor Loan

For securing a mortgage on guarantor, certain risks must be taken into consideration.

Credit Score Damage

If you are a guarantor to loan, it means your credit score is linked with the borrower’s score. If the borrower fails to meet the repayment deadlines, then your credit score will go down with them.

Unexpected Changes

Mortgage loans are a commitment for years or decades, and the guarantor needs to be in good financial condition. Unexpectedly, sometimes the unexpected event, like loss of a job or business loss, can weaken their financial security.

Limited Access to the Savings

If you are specifically selecting a loan against savings, then you are unable to unlock these until the loan limit has ended. It makes your access to your own savings limited, even in times of dire need.

Risks to Your Assets

You should think twice before securing a mortgage against your property. If the borrower does not fulfil the loan obligations, then the lender may seize the guarantor’s property as collateral. It may damage the relationship between family members or friends.

Conclusion

Guarantor Mortgage can be a powerful solution for first-time buyers who are struggling financially to meet the loan criteria.  However, it comes with serious responsibilities and legal commitments for the guarantor that must be considered before guaranteeing a mortgage. For this purpose, both parties should fully understand the risks involved and get some legal advice from professionals.

Frequently Asked Questions