Guarantor mortgages: How to get a mortgage with a guarantor

If you’ve had previous money problems and struggled with debt or you aren’t in a position to save up a large house deposit, being able to purchase a property might feel like a long way off. But taking out a guarantor mortgage could help you to get on the ladder much quicker than you were expecting.

Here at The Mortgage Genie, we have access to deals from more than 90,000 lenders, which means we’re sure to be able to find a product that suits your needs. Whether you’re in the perfect position to buy or you require a bad credit mortgage because you’ve recently been served with a CCJ, we’re here to help you take the next steps in your house buying journey. So, get in touch with our expert mortgage brokers to chat about your unique situation today.

We also want to ensure you’re as prepared as possible before starting the mortgage application process, so we’ve put together this guide to answer questions you might have about guarantor mortgages. Here’s what we’ll discuss below:

Keep reading to learn everything you need to know about getting a mortgage with a guarantor.

What is a guarantor mortgage?

If you take out a guarantor mortgage, this means someone else agrees to pay back your mortgage if you can’t.

Because having a guarantor on your mortgage will give lenders an extra layer of protection, as the chances of recouping their loan will be higher, having a guarantor can make it easier for you to get accepted for a mortgage. Having a mortgage guarantor could also allow you to borrow more money or even access lower mortgage rates.

It’s vital that you speak to an expert mortgage broker before taking out a guarantor mortgage, though, because going down this route does carry an element of risk. Your chosen lender will secure your mortgage against the value of your guarantor’s home or savings. This means these assets can be repossessed if you and your guarantor can’t pay your mortgage back. Here at The Mortgage Genie, we’re here to help you assess your situation and decide whether having a mortgage guarantor is going to be the right move for you.

What is a guarantor?

A guarantor is someone who agrees to pay back a borrower’s debt if they default on their repayment obligations. Guarantors must offer up their own assets to be used as collateral that the loan or mortgage can be secured against. Then, if the borrower and their guarantor can’t pay back the loan as agreed, these assets can be seized to cover the cost.

Who can be a guarantor?

Technically, as long as you choose someone over the age of 21 and with a good credit rating, you can ask anyone to be your mortgage guarantor. This could be a friend, family member, or parent, for instance. You can even ask your partner, as long as your bank accounts are separate.

Although, it is worth noting that a lot of lenders will require your guarantor to be a relative. So, before choosing someone, it’s important that you check the terms of the actual mortgage product you plan to apply for.

What checks are done on a guarantor?

Before accepting your guarantor, your mortgage lender will conduct a credit check on them and also ensure that they’re financially stable. There is no minimum credit score your chosen guarantor will need to have but, the higher their rating is, the more likely your lender will be to accept them. Before submitting your application, your guarantor can carry out a free credit check using checkmyfile.

They will need to pass affordability checks, too — these are similar to the checks you’ll go through when applying for your mortgage. They’ll typically be asked to provide payslips for the last few months and proof of the assets they plan to secure your mortgage against.

Lenders will want your guarantor to have some equity in their own home. Or, if they don’t have a property, they may consider securing your mortgage against your guarantor’s savings. If this is the case, the person you enlist to help you will need to leave their savings in the bank until a certain percentage of your mortgage has been paid off. The specific terms of this will be set out by your lender.

Do you need a guarantor for a mortgage?

Not everyone will need a guarantor to take out a mortgage. If you’ve saved a big enough deposit, your credit history is great, and your income is sufficient to cover all of your projected outgoings after you buy your property, you typically won’t need one. But, if you’re not in the strongest position to purchase a property, your lender may request that you add a guarantor to your agreement to give them some additional protection.

Why might I need to take out a guarantor mortgage?

Taking out a guarantor mortgage might be the best option for you if you’ve previously struggled to buy a home. There are a number of reasons why this might be — for instance, your income might be low, your credit score might be poor, or you may have only been able to save a small deposit.

Regardless of your situation, lenders will be more likely to accept your mortgage application if you have a guarantor because it helps to give them peace of mind that your loan will be paid back one way or another.

What bad credit issues can a guarantor mortgage be suitable for?

One of the most common reasons you might decide to use a mortgage guarantor is because you don’t have the best credit history. This can affect your ability to take out a mortgage or may have an impact on the interest rates available to you.

Some of the credit problems that may require you to have a mortgage guarantor include:

If you struggle with any of these issues and have been told that you’ll find it difficult to take out an affordable mortgage as a result, asking a guarantor to support your application can make all the difference.

How to get a mortgage with a guarantor

Depending on which provider you choose to go with, just like with any home loan, you’ll be able to apply for a guarantor mortgage either online or through an in-person appointment. However, the process will differ slightly, because you’ll also need to take the personal and financial details of the guarantor you’ve chosen.

Navigating the mortgage application process can be difficult and time-consuming, but you can ensure everything goes smoothly by enlisting the help of an expert mortgage broker. Here at The Mortgage Genie, we’re well-versed in overseeing guarantor mortgage applications, and we would be more than happy to help you secure yours. We can ensure that you have considered all of the necessary factors and prepared all the paperwork you’ll need to give yourself the best chance of having your application accepted.

How can you find the best guarantor mortgages?

The best way to find the most attractive mortgage products for your personal situation is to speak to a mortgage broker. Not only will they be able to take the time to truly understand the position you’re in and what kind of mortgage you require as a result, but they’ll also have access to a wide range of mortgage options that wouldn’t be available to you otherwise.

Who does guarantor mortgages?

A lot of mortgage providers, including most high-street banks, offer guarantor mortgages. This means, when applying for a guarantor mortgage, you could have a range of products available to you. To choose the best one, you’ll need to compare their interest rates, charges and fees, and terms to work out which is going to be the most affordable option in the long run.

Do I need a smaller deposit if I have a guarantor?

Lots of different factors can affect how much of a deposit you’ll need to buy a property, even with a guarantor. For instance, it can depend on the value of the property you want to buy, your financial situation, and the requirements of your chosen lender. But, generally speaking, if you have a mortgage guarantor, your deposit won’t need to be as big as if you were taking out a loan without that safety net.

Is my guarantor a joint owner of my property?

While your guarantor’s name will be on the legal documents pertaining to your property purchase, they won’t have a share in it. They are simply agreeing to make your mortgage repayments if you’re unable to. And, even if they do have to step in and make the repayments for you, they still won’t hold any ownership of the property.

Can my guarantor be removed from the mortgage at a later date?

Once you’ve taken out your mortgage, you’ll only be able to remove your guarantor if you switch mortgages. This is why it’s so important that your guarantor understands that they will be making a long-term commitment if they agree to be named on your application.

Lenders will typically outline a certain amount of equity you’ll need to have in your property before you can remortgage and remove your guarantor. And remember that, to take out a new mortgage without a guarantor, you will need to prove that you can afford and be trusted to make the repayments on your own. If you’re still struggling with bad credit, for instance, you may still need a guarantor, even if you take out a new mortgage.

We hope you now have a much better understanding of what guarantor mortgages are, how they work, and why you may require one.

Here at The Mortgage Genie, we can help you to find the best mortgage product to suit your needs, whether you’re a first-time buyer, looking to remortgage, or need a bad credit mortgage due to financial trouble you’ve had in the past.

If you would like to talk us through your situation and take full advantage of our expertise, get in touch with our team today so we can help you to buy your next property!