Most mortgage lenders cap how much they’ll let you borrow at around 4.5 times your annual income. For a lot of people, especially first-time buyers in areas where house prices have outpaced wages, that limit falls short of what’s needed to buy somewhere. This gap between what people earn and what property costs is why guarantor mortgages exist, and why they’ve become one of the most common routes onto the ladder for buyers without a big deposit or long credit history.
A guarantor mortgage brings a third person into the lending agreement, usually a parent, to back up your application with their own finances. They don’t own any part of the property and their name doesn’t go on the deeds. But they sign a legal commitment to cover your mortgage payments if you fall behind. This commitment is what gives lenders the confidence to approve applications they might otherwise turn down. In some cases, the guarantor will be named on the mortgage and this can impact their ability to apply for credit elsewhere.
What is a guarantor mortgage?
A guarantor mortgage is a standard mortgage, but with an added layer of security. The lender still assesses your income, credit history, and the property you want to buy in the usual way. The difference is that someone else, the guarantor, agrees to step in financially if you can’t keep up with repayments.
Most mortgage lending comes down to affordability. Lenders calculate how much you can borrow based on your income, typically around 4.5 times your salary, and if that figure falls short of the property price, your application can get denied. To help prevent this, many buyers now use a Joint Borrower Sole Proprietor (JBSP), which allows a family member or friend to go on the mortgage to add their income to your affordability, helping you get over the line to purchase, without being added to the property deed.
Guarantor mortgages are suitable for those with a:
- Small deposit
- Inconsistent or insufficient income
- Thin credit file
- New job
- Self-employed
- Recently moved to the UK
How does the security work?
A regular mortgage is secured against the property you’re buying. If you stop paying, the lender can repossess that property and sell it to recover their money. A guarantor mortgage adds a second source of security on top of that, tied to the guarantor rather than the borrower.
There are two main ways lenders structure this:
Savings as security
The guarantor deposits a lump sum, usually somewhere between 5% and 20% of the property’s value, into a savings account held by the lender. The money still earns interest, but it’s locked away and can’t be touched until a set point is reached, often once a certain amount of the mortgage has been paid off, or after an agreed number of years. If you miss payments, the lender can use this pot to cover the shortfall.
Property as security
Here the guarantor offers up equity in their own home instead of cash. This usually means they need to own their property outright, or have substantial equity in it, before a lender will accept it as collateral. If repayments stop and the sale of the property doesn’t cover the debt, the lender can pursue the guarantor’s home for the difference.
Who can be a guarantor?
Lenders need confidence that a guarantor can cover the mortgage if it comes to it, so the criteria is fairly strict. Most lenders want a guarantor who:
- Is at least 21 years old, and who won’t turn 75 before the mortgage term ends
- Is financially stable
- Is ideally a parent or close family member
- Has a good credit score
- Has proof of sufficient income or assets
What are the risks involved?
For the borrower, the risks are largely the same as with any mortgage: missed payments damage your credit score, and the property can ultimately be repossessed. The bigger risks sit with the guarantor.
Putting up savings means that money is unavailable, sometimes for years, regardless of whether the guarantor later needs it for an emergency. Putting up property means a guarantor’s home could be repossessed in a worse-case scenario, on top of their own existing mortgage liability. Acting as a guarantor also shows up in affordability assessments if the guarantor wants to borrow for themselves later.
Money between family members carries weight beyond the spreadsheet, and a guarantor arrangement that goes wrong can strain things. It’s worth having an honest conversation about worst-case scenarios before signing anything, not after.
It’s very likely that the lender will need the guarantor to seek Independent Legal Advice, which is an additional cost you should factor in. Even if they don’t, you should strongly consider it to ensure you’re all fully aware of the risks.
Is a guarantor mortgage right for you?
A guarantor mortgage can open doors for you that would otherwise stay shut, particularly for first-time buyers with a small deposit or credit history that’s still being built. It can mean borrowing more than your income alone would justify, or accessing rates you wouldn’t qualify for solo. But it’s not a decision to make lightly, and it works best when the borrower and guarantor go in with a full understanding of what’s being asked.
Every lender sets its own rules around age limits, deposit thresholds, and the type of security accepted, so the right deal depends on your specific circumstances and those of your guarantor. Speaking to a mortgage adviser who knows the guarantor lending market can help you work out which lenders are likely to say yes, and on what terms, before you commit to anything.