Guarantor Mortgages

Mortgages that are Guaranteed by Parents, Friends or Relatives

A mortgage lender will want to be sure you can afford to repay its money, so it will expect you to prove you have enough surplus income from work, a pension or other sources to meet your monthly payments.

If you can’t show this, you may still be able to borrow provided you can convince a relative (your parents, if you’re a first time buyer, or you son or daughter, say if you’re elderly) or a close friend to act as your guarantor.

Even if you can make the repayments without help, you may find a wider range of lenders willing to consider you if you strengthen your case by offering a guarantor.

What is a guarantor?

Basically, a guarantor is someone who promises to take responsibility for your debt. Typically a father, a mother, or other close relative.

People who are over 60 are often discriminated against by mortgage lenders, so they could get their children to act as a guarantor.

The guarantor guarantees that they will make the monthly mortgage payments, eventually clearing what you owe, if you default either because you can no longer afford, or are no longer willing, to pay.

This is not a commitment to be taken lightly.

Once the paperwork is signed, your guarantor is legally bound and, unless the lender agrees to release them (which is unlikely unless you offer a replacement), they can be made to pay out at any time during the mortgage term even if it means selling their own home.

Who can be a guarantor?

To be accepted by a lender, a guarantor must prove they have enough disposable income, after paying their own debts, to afford your monthly repayment too.

But remember

If you can’t make your full monthly payment, your mortgage guarantor will be legally obliged to cough up regardless of the hardship it causes them.

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