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A guarantor mortgage is a type of home loan in which the burden of risk is shared with the homeowner and a parent or close family member (the guarantor). This means that the loan is typically secured against the guarantor’s home or savings, and that they are agreeing to cover the mortgage payments should the homeowner fail to meet these.
Some guarantor mortgages enable the guarantor to use their collateral instead of a deposit in order to borrow the full amount.
Guarantor mortgages can be a great option for those who may otherwise not be able to get a mortgage.
Lending Expert is a guarantor mortgage broker and can compare over 1,000 mortgage deals across the UK. Whilst high street banks will typically offer joint mortgages too, we can help find the best option for you with rates from 1.39% per month, whether you are looking for interest only, fixed, variable, tracker or have a bad credit history.
Start by clicking on ‘Check my Eligibility’ below and enter some basic details about you and your property – and Lending Expert will be able to help you find the best guarantor mortgage according to your requirements.
- Rates from 1.39% per month
- Borrow up to £2 million
- Loan Term – 1 to 25 years or upon request
- Minimum 25% deposit
- Interest only, fixed, tracker mortgages available
- Free tool to compare guarantor mortgages
What Is a Guarantor Mortgage?
A guarantor mortgage is a type of home loan where a guarantor (typically the borrower’s parent or close family member) puts up their home or savings as collateral against the loan. This guarantor also agrees to cover any mortgage payments that the homeowner is unable to meet.
There is a great deal of risk involved for the guarantor as, if for any reason the homeowner is unable to meet payments, the lender could forcibly sell any collateral that the guarantor has put forward as ‘security’.
For whomever is acting as the guarantor, their name will be added to any legal documents however they will not be on any of the property’s title deeds, nor will they own any of the property.
Depending on the lender, some guarantor mortgages may use their savings rather than property. For example, they can put money into a special savings account which becomes the default payment method in the case of any missed payments.
What Mortgages Can Work as Guarantor Mortgages?
Guarantors can be used for different types of mortgages including:
- New mortgages to purchase a property
- Remortgages, as long as there is proof of perfect payment history
- Change of borrower
What Areas of the UK Does Lending Expert Cover as a Guarantor Mortgage Broker?
We proudly offer guarantor mortgages across the entire UK, including Birmingham, Brighton, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester, Nottingham, Newcastle, Sheffield and more.
How Much Can I Borrow From a Guarantor Mortgage?
Speak to an expert today in order to find out how much you can borrow from a guarantor mortgage.
For guarantor mortgages, your repayment plan will need to allow for not just your mortgage payments, but also enough to cover any of your guarantor payments.
Can I Get a Guarantor Mortgage?
A guarantor mortgage may be a suitable choice for those who:
- Have little or no credit history such as those who have never had a credit card
- Those with a poor credit score
- Anyone who is struggling to save up enough money for a deposit
- Borrowers with a low income
Who Can Be a Guarantor?
People typically choose older relatives or parents to be their guarantor both for the close relationship but also because of their larger income and better credit score.
In some cases, lenders will insist that the mortgage guarantor will need to have fully paid off their own mortgages or at least a large proportion of it. In the case that they have not repaid their own mortgage, they may need to demonstrate a sufficiently high income to cover both their mortgage payments and those of the homeowner.
When choosing your guarantor, you will need to ensure that they have a stable financial record or can suitably demonstrate financial means. For example, they will need to have the following:
- Savings or property to act as collateral
- Good credit history
- Someone who is aware of the risks and has received proper legal advice
Can I Stop Being a Mortgage Guarantor?
It is not necessary for the guarantor to stay on the mortgage for the entire duration of the loan term. For example, if the borrower is able to pay off a certain amount of the mortgage or if their personal financial circumstances improve, the lender may allow a change in the terms of the mortgage.
What Other Factors May Impact Eligibility for a Guarantor Mortgage?
In order to apply for a guarantor mortgage, the guarantor will usually need to live in the UK, demonstrate an income paid in GBP into a UK bank account and be able to demonstrate a close, long-term relationship with the borrower.
Make an enquiry from our team of experts to find out more about your eligibility for a guarantor mortgage. You can also explore our guide “Why Was My Guarantor Declined” for further information.
What Are the Benefits of Taking Out a Guarantor Mortgage?
Guarantor mortgages can hugely benefit homeowners as it enables them to get a larger mortgage, even with little or no deposit. This means that even for those borrowers with a bad credit score, they are able to secure a mortgage.
What Are the Potential Downsides of Guarantor Mortgages?
Most of the potential risk for guarantor mortgages falls on the guarantor. If the homeowner is unable to meet their mortgage payments, the guarantor is legally responsible for repaying the mortgage. If not, they risk both damaging their credit score and potentially losing their own homes or savings.
Which Lenders Provide Guarantor Mortgages?
Many lenders on the market offer competitive rates for guarantor mortgages.
At Lending Expert, we compare the guarantor mortgage market in order to find the best provider to suit your needs.
What Happens if a Guarantor Is Unable To Pay?
Lenders are typically very thorough when checking a guarantor’s finances and financial track record before approving a guarantor mortgage, meaning that this situation is quite rare.
That being said, it can happen if the guarantor’s financial situation suddenly changes. In this case, the lender would first investigate why the guarantor is unable to meet the payments. Find out what happens if your guarantor refuses to pay by following the link.
The consequences can be serious because it means that the guarantor is breaking the clauses of the signed contract. Depending on the severity, this could mean repossession of property or savings.
Rather than approaching the lenders directly and dealing with their in-house advisors, working with a mortgage broker will offer impartial advice to get you the best deal on the market.
How Do I Compare Guarantor Mortgage Rates?
Working with a mortgage broker such as Lending Expert will help you find the best mortgage to suit your circumstances without impacting your credit rating.
Contact us today to speak to an expert and start comparing guarantor mortgages to find the best option for you.
Why Use Lending Expert As Your Guarantor Mortgage Broker?
Working with a number of high street banks and specialist mortgage lenders, Lending Expert has access to over 1,000 mortgage deals available and is in the perfect position to help you get approved and get the best rates.
Our eligibility checker is completely free to use and can provide an indicative quote, with no obligation.
Founded in 2013, we have years of experience working in the secured loan and mortgage market and have helped thousands of customers to date. Our values have always been to find the right product for the right individual at the competitive rate – and we are pleased to offer our services for you today!