Depending on your circumstances, choosing to get a guarantor on a mortgage can be a valuable way to access lenders that may be otherwise inaccessible to you. Different lenders have varying policies surrounding guarantors, but there are plenty of options if you have a suitable guarantor to provide additional security on your mortgage.
We cover everything you need to know about guarantors and mortgages below. Read on to learn more about who can be a guarantor, whether you're a suitable candidate and the benefits of this method of getting a mortgage.
The answer to the question, 'can someone be a guarantor on a mortgage?' depends on a few different factors. Typically, guarantors have a strong credit rating and a larger income than you, making them a solid 'backup plan' for lenders to improve the likelihood of you being approved for a mortgage. Some lenders may have particular criteria for someone to become a guarantor, requiring your chosen person to meet those standards to be approved.
find me a mortgageA guarantor is an individual, whether a friend, family member or another person you know, that puts their name and credit against your mortgage as an extra degree of security. Much like a guarantor on any other loan, a mortgage guarantor provides the promise that, if you fail to make payments, they can be recovered from the other individual. It's crucial that you consider all the pros and cons of a guarantor before either agreeing to become one or accepting an individual's help.
In a guarantor mortgage, the additional person that signs a contract acts as a form of security, typically using their property or assets as part of the financial agreement. This extra protection improves mortgage options as the lender has less risk and significantly reduces the chance they'll lose money if you fail to pay your monthly mortgage payment.
While property is the most common security in a guarantor mortgage, they can also choose to place savings as security, which typically cannot be accessed until the mortgage is paid off or the mortgage terms are changed.
The eligibility requirements for guarantors change from one lender to the next. However, some of the most common conditions for eligibility include the following:
Some lenders may require your guarantor to be a close family member, such as a parent or grandparent. Family members are the most common type of guarantor, partly due to lender requirements and partly because parents or grandparents may have more income and are also more likely to be homeowners.
While less common, some lenders may also allow friends to become a guarantor for someone. It's worth noting that you'll likely have fewer options for a guarantor mortgage with a friend. However, provided they own a property or have the necessary savings, there's still a possibility you can find a suitable mortgage.
Alongside requirements related to connection and relationship, lenders usually have other standards guarantors have to meet. For instance, being a homeowner is often the first requirement for a guarantor to be considered. If the potential guarantor is still paying their mortgage or is retired with no income, they'll need to prove they can cover the cost of the additional mortgage. Finally, a good credit report is essential for a guarantor.
If you're considering a guarantor mortgage for your first-time mortgage or buying a bigger home, it's worth considering whether this type of mortgage is most suitable for you. A guarantor mortgage is a secondary option once you've exhausted other avenues. For example, you may be a suitable candidate if the following applies to you:
If you’re having difficulty saving up enough money for a house deposit, a guarantor mortgage can give you access to more options while potentially reducing the amount of money you need to put down.
Whether you're not had credit before or just moved from abroad, no credit history may make it difficult to get a mortgage without the support of a guarantor.
A traditional mortgage may not be an option if you've been in debt or struggled with your finances. In this case, a guarantor mortgage may be a suitable alternative.
If you’re newly self-employed, getting a guarantor's support may reduce the time you need to wait before you can start to apply for mortgages, which is helpful if you don't want to wait 2-3 years.
We've covered what a guarantor mortgage is and how it works, but what are the benefits of this method? Here are some key reasons you may consider a guarantor for your mortgage.
If you'd like to buy a bigger property, a guarantor mortgage may be a way to increase the amount of money you can borrow. Moving to a higher-cost-of-living area can be a valuable way to buy a home that would otherwise be inaccessible.
If you’re unlikely to be approved for a mortgage based on advice and mortgage calculators, a guarantor can remove that barrier and provide access to a specific type of mortgage. While these mortgages won't be exactly the same, they are a way to get a foot on the ladder.
Some guarantor mortgages allow you to borrow up to 100% of the property value. This flexibility may suit your circumstances better, providing options for mortgages that wouldn't be available to you through other means.
Guarantor mortgages can open the door to mortgage offers suitable for your financial circumstances and goals. If you're considering a mortgage, using our mortgage calculator or speaking to our expert team is an excellent place to start for free advice. Contact us directly to learn more about how WIS Mortgages can help you as a specialist mortgage broker in Kent.
As a mortgage is secured against your home/property it may be repossessed if you do not keep up with the mortgage repayments.
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