Young couple carrying box

About guarantor mortgages 

Guarantor mortgages are primarily to assist first time buyers to get on the property ladder and it will enhance the borrowing power of the applicant.

How does a guarantor mortgage work?

The guarantor will give a fall back to a lender in case the applicant defaults on their repayments. Basically, they sign up to be liable if the applicant stops paying back what they owed; therefore, the lender has the right to pursue the guarantor for any missed payments. Their guarantee basically means that you are less of a risk because they have a way of getting their money back if you don't stick to your agreement with them.

Things to consider

Not all lenders offer guarantor mortgages and those that do tend to enforce a more restrictive lending policy than would normally apply to non-guarantor loans. Students are a common type of applicant along with first time buyers and young professionals that are currently on a low income.

The lenders that do market this type of product will adopt the following criteria:

  • The guarantor must be a blood relation (for example, their parents, brother or sister)
  • The affordability is predominantly assessed on the guarantor's income
  • Any other mortgages or loans that the guarantor has will be taken into account under the affordability assessment.

About multiple borrower mortgages 

In addition to guarantor mortgages some lenders offer multiple borrower mortgages – this is very similar to the guarantor arrangement and most lenders allow four applicants on the mortgage application, and some allow students to be the main applicant.

With this arrangement, the following criteria normally applies:

  • All borrowers must sign the Mortgage Deed
  • It is mandatory that any borrower/s not named on the Title to the property obtain independent legal advice.

In summary, this can be a complex area and it is worth seeking independent mortgage advice before deciding if either of these arrangements is right for you.

As independent mortgage advisers, ESPC Mortgages can help with all aspects of understanding your budget, applying for a mortgage and dealing with the relevant insurance requirements. Give us a call on 0131 253 2920.

The information contained in this article is provided in good faith. Whilst every care has been taken in the preparation of the information, no responsibility is accepted for any errors which, despite our precautions, it may contain. No individual mortgage advice is given, nor intended to be given in this article.

The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.

ESPC (UK) Ltd is an Appointed Representative of Lyncombe Consultants Ltd which is authorised and regulated by the Financial Conduct Authority.