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Gary has been providing advice to clients on their mortgage needs for over 10 years. He has extensive experience in providing advice and recommendation on all types of mortgage including high net worth purchases, new build purchases, self-employed, contractor and adverse credit. Clients working with Gary can expect a straight-forward honest and highly personalised service.
Gary Boakes
Director and Mortgage advisor
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What is a guarantor mortgage and what is a parent guarantor?
A guarantor mortgage is for customers that don’t have the ability to buy property on their own. It could be a good option if they have little or no deposit, low income or a poor credit score.
The guarantor is usually a parent – which I suppose answers the second question. But it can also be a family member or a friend. As guarantors, they essentially agree to pay the mortgage if the main borrower cannot.
Do mortgage lenders still accept guarantors and is it easier to get a mortgage if you have a guarantor?
There are still a few traditional guarantor mortgages available. But what’s become more popular is something called Joint Borrower Sole Proprietor, which is very similar. The majority of lenders are doing this type of product with family members and parents.
In terms of how easy it is, as always it depends on your set of circumstances, affordability and your credit score. It is something that we’ve done quite often – they are certainly becoming quite popular.
How does a guarantor mortgage work?
If you are unable to borrow on your own, due to your credit score or your income, a guarantor could help you buy a home.
The lender will basically look at the guarantor’s circumstances – their affordability, income and outgoings and see if they are credit worthy to cover the mortgage payments if you are unable to pay your mortgage at any point.
The guarantor basically makes sure you can make those mortgage payments – if not, they will step in.
What types of guarantor mortgage are there?
The Joint Borrower Sole Proprietor is the most popular one now, but there are others that use savings or property as security. If your guarantor has savings set aside, some lenders may consider that, or use their property – although those options aren’t as mainstream as they used to be.
We offer fee free mortgage advice.
We do not charge our customers for any mortgage advice we are purely paid by the lender on completion.
Will I be able to borrow more with a guarantor mortgage? How much of a mortgage can I get with a guarantor?
It’s all based on affordability. That’s no different from any other mortgage. Most of these mortgages bring two incomes together. They always look at both people’s outgoings and affordability.
Potentially, the parent owns a property or still has a mortgage, and the lender will take that into account within affordability. In terms of how much you can borrow, it’s similar to normal mortgages. People talk about 4.5 times income as a guide, but If you talk to a broker we will give you a specific figure based on your situation.
Can you get a 100% mortgage with a guarantor?
At the moment the majority of mortgages start at 95%. There are one or two 100% mortgages out there, but they don’t have a guarantor option at this stage. It’s likely you would have to put down a minimum of 5% deposit.
Do guarantor mortgages have higher interest rates?
Generally not, it’s based on the loan to value and whether the lender has a specific product for that type of mortgage. But in most instances you get to pick from the lender’s range. We don’t usually have to pay higher rates for these mortgages.
Who is a guarantor mortgage suitable for and how do you qualify for one?
It’s suitable for anyone to a certain degree, but most of the time it’s First Time Buyers looking to get on the property ladder. Maybe they have a smaller deposit or just not enough income to reach what they’re looking for. Maybe they’ve had a bit of bad credit in the past.
Generally, too, it’s about the guarantor and how it fits with them. You can usually only take a mortgage up to a certain age and on a guarantor mortgage, it’s based on the oldest person. So if your guarantor is 60 it will be harder than if they are 40 or 50.
In terms of the person buying, anybody can qualify for the mortgage as long as their guarantor fits the rules.
What documents should I provide for a guarantor mortgage?
It’s no different from a normal mortgage. It will be ID, proof of address, pay slips, bank statements and proof of deposit.
The biggest thing on a guarantor mortgage is that the guarantor has to get separate legal representation. In most instances they will have a legal liability for the property but actually not be on the deeds or the mortgage – they just have the financial responsibility for it. The legal representation is about understanding what risks this can pose to them.
Who can guarantee a mortgage?
It’s family members and friends – parents, grandparents, siblings and friends.
What are the risks of a guarantor mortgage?
The biggest risk is not having legal ownership of that property but financial responsibility for it. If the person that owns the property does not pay the mortgage, you are liable for that, but you have no legal ownership – you’re not on the mortgage deeds.
These mortgages are essentially great, but as someone buying a property with a guarantor to boost your affordability, the likelihood is that you’ve struggled with a normal mortgage lender’s affordability criteria.
So, what does your guarantor mortgage look like on a monthly basis? Are you happy with the monthly costs? That’s something to bear in mind. While it’s fantastic that with your dad’s help you can get a mortgage of £200,000, but actually if most lenders would limit you to £150,000, can you actually afford that extra £50,000?
Obviously the guarantor wants to help you, but they’re just there as a backup. So do be careful.
We work with dozens of lenders including the high street banks and can compare their deals for you, always with your best interest at heart.
What are the pros and cons of a guarantor mortgage?
It can really give you that extra push you need. We did a Joint Borrower Sole Proprietor mortgage this year where the client was only £30,000 short for a property that he really wanted to buy. It was very close.
It was a nice, brand new flat and the guarantor deal got him on the property ladder – it worked perfectly for him because he didn’t need to jump up a lot. It was just a small bit of help from his dad.
The negatives are that you really need to understand what you’re getting yourself into. The age factor is also important. If your parent is 50 you’ll be able to potentially get a 25 or even 30 year mortgage term. But if they are 60 you may only be able to get 15 or 20 years – which means higher monthly payments.
It’s like any mortgage – you’ve got to look at it and whether it’s really affordable.
How much does a guarantor need to earn for a mortgage?
There’s no real minimum income. It’s all based on affordability. We will be taking into account their income and expenditure – including the cost of their current home.
As long as their affordability outweighs that and they can add some extra benefit to the person buying the property, great.
What happens if my guarantor is unable to make repayments too?
If this is the case, you need to speak to the lender and potentially put a payment plan into place.
We all see the big black writing on your mortgage offer which says that your house will be repossessed if you don’t keep up your payments. That’s ultimately what will happen if you or your guarantor can’t pay.
Can I get a guarantor mortgage for a Buy to Let property?
Yes, you can. We’ve not done any of these, however, because what you actually find is that some Buy to Let lenders will accept first-time landlords and first-time buyers with no income anyway.
So you technically can, but there are usually better options out there.
Can a parent be a guarantor if they are retired?
Technically yes. Again, it is based on income and age. If your guarantor retired at 60 and has a £50,000 a year pension, that’s going to be absolutely fine. It all depends on age and income.
What happens if my guarantor dies?
There are a couple of things you can do if your guarantor dies. Ultimately, the first thing would be to look at whether you’re now in a position to take that mortgage on yourself.
With a guarantee mortgage or Joint Borrower Sole Proprietor mortgage, there always has to be a plan for how you can actually take that over mortgage yourself in future.
If not, potentially you may have to look for another guarantor. Is there another family member that could act for you?
If you were to have a bereavement, the first step would be to phone up the broker that dealt with your mortgage originally or speak to the lender themselves to find out the situation. Lenders may look at it slightly differently depending on how well you’ve been making the mortgage payments.
Do guarantors get credit checked and can I get a guarantor mortgage with bad credit?
Yes, guarantors will be credit checked like anyone else. The lender will want to know that they can afford the mortgage payments if you couldn’t.
In terms of getting a guarantor mortgage with bad credit, it depends who’s got it. If it’s the buyer, and the guarantor has really good credit then that’s obviously more favourable. Lenders would look at it very differently if it was the other way around.
But every lender is different. Give us the scenario and and we’ll come and tell you what we can and can’t do with the lenders available to us, based on your circumstances. Both guarantor and Joint Borrower Sole Proprietor mortgages will allow bad credit – it’s certainly something we can look at.
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We take away the stress and uncertainty of applying directly with a lender who may not have the most suitable deal for you.
Can I stop being a mortgage guarantor?
You can, but the owner of the property is going to have to be in a financial position to take over without a guarantor in place. You can’t just decide not to be the guarantor one day. Planning needs to be in place to do that – you are in it long term.
We explain that at the outset and talk about the risks – and that’s why you have to get extra legal representation to explain those legal details to you, because it isn’t a safe option. It’s not something you can take lightly.
How do I get a guarantor mortgage and how can a mortgage broker help?
Speak to a mortgage broker for advice. These are very specialised products with a lot of risks to them. There are things we need to explain, not just to you but also to the guarantor.
Not every lender does these, as well. You can’t walk into your bank and ask for a guarantor mortgage. A broker comes into play here – we’re going to take your circumstances and look at what lenders are available to you, to hopefully put you in a position to buy a property. Give us a call and we can help you with that.
Warning Text
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
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