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. The Property Management Company is providing a complete guide on guarantor mortgage covering what a guarantor is, who can be, and which type suits your situation.
What is a Guarantor Mortgage?
A guaranteed home loan is 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:
- 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.
- 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.
- 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 of what they require before approving a loan.
- 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:
- The loan guarantor should be at least 21 years of age.
- The lender requires the guarantor to own their home outright and have a high level of equity.
- An income to cover the repayment amount if required.
- A strong credit score
- The lender also requires the guarantor’s mortgage age limit, and because mortgages typically last for 25 years, they need a guarantor who may survive this fixed term.
- They must take legal advice before agreeing to act as a guarantor.
How To Apply For The Guarantor Mortgage?
The step-by-step guide for applying for a mortgage as a guarantor is given below:
- Find a guarantor that is suitable for your mortgage.
- Select a broker that provides these services because not all ladders give this.
- After this, lenders require independent legal advice from the guarantor to understand the risks, such as losing their homes, etc.
- Then both parties have to provide the documents that include the proof of the ID, addres that the guaranteed person has the capacity to pay mortgages.
- The guarantor will sign to secure the loan against their own property or a savings account.
What types of Guarantor Mortgages are Available?
Mortgages for the guarantor come in four main forms, each using a different type of security such as income, savings, property or equity release.
Income security
It is also called an Income Boost or Joint Borrower Sole Proprietor Mortgage, which works by adding some or all of a family member’s or 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 to step in to help. But if you miss your payments, your guarantor will legally be obliged to pay. |
Savings as Security
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 3 to 5 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. Once the fixed term ends and all the repayments are made, the mortgage will continue in your name alone. Your guarantor is no longer responsible for the mortgage and is fully released from all responsibilities.
| Well-known example, Barclays Family Springboard Mortgage is one of the most recognised products of this type in the UK market. |
Property as Security
In this type, the guarantor uses the equity in their own home as security against your loan, which is about 25 to 40%. If you fail to pay the loan, then the lender has the legal right to pursue the guarantor. Sometimes, the serious cases force the lender to sell the property of the guarantor to recover their balance.
Because of this, it is risky, and fewer lenders give this option to the mortgage takers. For this, both parties should take independent legal advice before proceeding.
Equity Release as Security
In this type of mortgage, a family member releases the equity from their own home and gifts it to you as deposit protection, that’s why it isalso known as the gifted deposit boost. This results in two separate mortgages that are running at the same time.
- Your family member’s mortgage on their own property to release the gifted funds.
- Your mortgage on the new home you are purchasing.
The gifted amount must be declared to your lender through a signed gift deposit letter confirming no repayment is expected.
Which Lenders Offer the Best Guarantor Mortgages in 2026
The most popular lenders across the UK include:
- Barclays Guarantor Loan
- Nationwide Guarantor Mortgage
- Natwest
- Gen H
- Skipton Building Society
- Leeds Building Society
- Aldermore
- The Loughboroughs Building Society
- Cambridge Building Society
- 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 close 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 with a guarantor, certain risks must be taken into consideration.
Credit Score Damage
If you are a guarantor for a loan, it means your credit score is linked to 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 that can span years or even decades, and the guarantor must remain in a stable financial position throughout. Unforeseen circumstances, such as sudden unemployment, serious illness, or a business failure, can severely weaken their ability to meet repayment obligations if called upon.Â
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.
