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Mortgage Guarantors

By: Emma Eilbeck BA (hons) - Updated: 22 Apr 2017 | comments*Discuss
 
Mortgage Guarantor First-time Buyer

With first-time buyers increasingly struggling to get on the housing ladder, would be buyers are turning to the bank of mum and dad to help give them a helping hand.Guarantor mortgages are a great idea if you have parents or a close family member that is willing to act as a guarantor for your mortgage and take responsibility for any repayments you may miss.

A guarantor mortgage can work in a number of ways, essentially it enables the borrower to take out a bigger mortgage. For example, a lender may be able to lend you £90,000, but the property you want may be £120,000, so you would need to have somebody act as a guarantor for the rest of the loan, which means them taking on any risk involved if you lose your job or can’t afford the mortgage.

Another method of using a guarantor is to get the mortgage in your name, but to then have your parents act as a guarantor for the whole amount of the mortgage, which means they could be liable for the complete mortgage payments.

Who Can Act as a Guarantor?

It will normally be your parents or another family member that will act as a guarantor, it is a big responsibility and not a lot of people will be volunteering to guarantee somebody else’s mortgage.It involves a large amount of trust because there is a realistic chance that they might find themselves paying the mortgage off themselves.

Just because your parents are older and more experienced, that does not necessarily mean that they will be accepted straight away to act as a guarantor. A lender will want to look at the financial stability of any guarantor and look at what their income is, how much they already have to pay back on their own mortgage, and for how much longer they are likely to remain in employment.

It is important that you treat a guarantor mortgage the same as you would any other type of mortgage. A lot of lenders offer guarantor mortgages and they can often have some good rates, many will welcome the fact that you have someone with some experience of paying back a mortgage behind you.

What a Guarantor Mortgage Can be Used For?

One of the most common uses of guarantor mortgages is for university students. Many parents find that it makes financial sense to buy a property for their child to live in, rather than throw money away in rent. It also lets the parents check up on the property and make sure their child isn’t living in the equivalent of a slum. A parent may put the property in the child’s name but pay the rent themselves, and use the rent from the other tenants to pay off the mortgage, they could then sell the house on once the child leaves university.

Exiting a Guarantor Mortgage

Just because your parent’s names are on the mortgage when you first take it out, don’t worry, this doesn’t mean that they have to be on their forever.Once you start to earn more money or you feel that you can manage the payments yourself you can wave goodbye to your parents and get their name taken off the mortgage. Your parents will no doubt also breathe a sigh of relief because they will no longer face paying your mortgage.

Guarantor mortgages are a great idea if you firstly have parents that have some spare money, and secondly if they trust you to pay back your mortgage. Depending on what type of guarantor mortgage you take out, in an ideal world your parents need not be liable for any of the mortgage payments, if you stick to your side of the deal and keep up with repayments. However, guarantors can play a vital part in the mortgage process should you loose your job and can’t make the repayments, and at the end of the day, who better to sympathise than your own parents.

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[Add a Comment]
Hi, i was a guarantor for my mother when she wanted to buy her council house back in 2000. mortgage was accepted. I have since moved out of the property and now living with my partner in a council house. My siblings are now paying the mortgage. My name still is on the mortgage letters. Can i exercise the right to buy on the council house where i live now?? Do i need to inform council that i have a previous mortgage. My wife is the main applicant and also the sole tennant. Any help is appreciated. Kind regards.
Jimmy - 23-Mar-17 @ 12:37 AM
Hello I have a question . My Brother(My MoM's- elder Brothers Son) is repaying me back as I had helped in 2 yrs back. now he is returning me the money and I am showing this moneytowards the 10%deposit of the house.Will there be any issues with the bank whom I am approaching for mortgage , as I already have a consent letter from him that he is is not interetes or nor hold any interest in the property. Thanks
Sarla - 25-Feb-17 @ 7:02 PM
Hi I've been turned down for a Morgage yet a friend is willing to help out can he be a guarantor or basically am I stuffed and have to keep renting
Oggiecharmed - 20-Jan-17 @ 7:47 PM
Hello, I am full-time employed (on a permanent contract) with a salary of £36,000 and own a £320,000 property in London (with a mortgage for half that amount). I have no other debts or bad credit and am trying to no avail to help my Mom buy a retirement flat. Her income is low (£11,000) and she has £40,000. We need to apply for a mortgage of £40,000 for a retirement flat we have found, but can't seem to find anyone to help us. I am more than happy to act as guarantor. Any advice would be greatly appreciated.
Fi - 16-Sep-16 @ 1:21 PM
Paul - Your Question:
Having split from my husband I need to take the mortgage over by myself but as I only work part time I'm not sure if I will be able to even though I have been paying it with all bills for 3 years so know I can afford it.he now wants to have his name off so can buy a house for himself.he is willing to act as gaurentee but only if this won't stop him being able to get a new mortgage himself.would being a gaurentee for me go against him doing this??

Our Response:
Both you and he would have to seek financial advice regarding this as much depends upon what his own income is and whether he would be able to afford to keep up the repayments should, for any reason, the agreement goes awry.
AffordableHomeAdvice - 8-Sep-16 @ 1:59 PM
Having split from my husband I need to take the mortgage over by myself but as I only work part time I'm not sure if I will be able to even though I have been paying it with all bills for 3 years so know I can afford it.he now wants to have his name off so can buy a house for himself.he is willing to act as gaurentee but only if this won't stop him being able to get a new mortgage himself.would being a gaurentee for me go against him doing this??
Paul - 7-Sep-16 @ 9:20 PM
NC - Your Question:
Hello,Is it possible to use friends as a mortgage guarantor if they are willing and able? It seems that it is always direct family that are used, but our friends have a better financial position to support us. My wife is self employed and so although we are able to pay the mortgage and deposit, we can not borrow the full amount. If not, how viable is a shared ownership agreement between us and our friends.Thanks,NC.

Our Response:
Parents, families and/or friends can act as a guarantors.
AffordableHomeAdvice - 19-Aug-16 @ 2:26 PM
Hello, Is it possible to use friends as a mortgage guarantor if they are willing and able? It seems that it is always direct family that are used, but our friends have a better financial position to support us. My wife is self employed and so although we are able to pay the mortgage and deposit, we can not borrow the full amount. If not, how viable is a shared ownership agreement between us and our friends. Thanks, NC.
NC - 19-Aug-16 @ 8:21 AM
Shazza - Your Question:
My sister is basically trying to emotionally blackmail and put pressure on me to go into a joint mortgage with her as a First Time Buyer in name-only.I am scared that she won't be able to keep up with the payments once she realises the other outgoings that go along with having a mortgage. Like regular bills coming in, grocery payments, car payments etc not to mention she also has a baby that will need feeding and clothing. Her income of 32 hours per week isn't high enough and even though I also work part time on 30 hours a week my salary grading is higher than hers and I think that with both our incomes combined the mortgage would be approved. I don't want any negative impact to come to my name when she won't be able to keep up with payments on her own.Please can someone help me as to what my options could be without having to look like the one person who stood in her way to get her own house. I have genuine and serious concerns on this matter.I look forward to hearing from you soon. Thank you in advance.Regards,Sheila.

Our Response:
From an objective perspective, you should never go into agreeing to such a commitment, especially if a) you feel as though you are being emotionally blackmailed and b) you are unsure that your sister can keep up with the repayments (for which you will be financially responsible if she doesn't). When you become a mortgage guarantor you take on responsibility for someone else's mortgage and this means committing to cover repayments if the original borrower is unable to. If the sums don't add up, or you are unsure of taking on this massive 25 year commitment, then this is as good a reason as any to refuse to go into this partnership. If your sister can't pay then the building society will be able to pursue you for the debt which could include you having your own home repossessed to repay her mortgage.
AffordableHomeAdvice - 14-Jun-16 @ 10:34 AM
My sister is basically trying to emotionally blackmail and put pressure on me to go into a joint mortgage with her as a First Time Buyer in name-only. I am scared that she won't be able to keep up with the payments once she realises the other outgoings that go along with having a mortgage. Like regular bills coming in, grocery payments, car payments etc not to mention she also has a baby that will need feeding and clothing. Her income of 32 hours per week isn't high enough and even though I also work part time on 30 hours a week my salary grading is higher than hers and I think that with both our incomes combined the mortgage would be approved. I don't want any negative impact to come to my name when she won't be able to keep up with payments on her own. Please can someone help me as to what my options could be without having to look like the one person who stood in her way to get her own house. I have genuine and serious concerns on this matter... I look forward to hearing fromyou soon. Thank you in advance. Regards, Sheila.
Shazza - 13-Jun-16 @ 1:53 AM
Hi, I was wondering if it is possible to act as my Mother's guarantor as she was wanting to buy her council property. Any information on this process would be much appreciated...She's 90 years old and has lived in this house for over 40 years.
Mac - 26-Apr-16 @ 11:36 PM
Hi, I am currently a guarantor on my parents mortgage of £35k. Although they pay their mortgage with their pension I want to buy my own place.....Will I be able to go to a lender as a first time buyer with my partner and get a mortgage out?
Don R - 19-Apr-16 @ 9:19 PM
Keg - Your Question:
Hi, any help would be gratefully appreciated. I have a mortgage taken out in 2006 my mum is my guarator. Outstanding on the mortgage is £84,000.00 I have tried to sell the house and it's not currently had an offer been made. I have decided to look into renting it out and move back in with my parents for a year whilst I start a new career and when I spoke with the Co op yesterday to ask for permission to let the lady advisor couldn't locate a manager and therefore with it being something she was unsure of as they stopped doing guarator mortgages she would call me back. Few hours later she called and said the only way I could do this is by taking my mum off as guarator, I need to write to them with a letter from mum confirming she will come off, 3 month bank and pay slip statements she also said the rate I'm on atm 4.75% would increase by 1% to 5.75% and once I am on this new mortgage its froze I can change to another. Can my mum be left on the mortgage and me come off as my employment history this past two years has been me changing positions as child care is so expense and I'm due start a new position end of April

Our Response:
Unfortunately, we can only answer generalised question, not more specific ones such as yours. I can only suggest you speak to the Citizens Advice Bureau who may be able to advise further, or an independent mortgage adviser.
AffordableHomeAdvice - 31-Mar-16 @ 12:30 PM
Hi, any help would be gratefully appreciated. I have a mortgage taken out in 2006 my mum is my guarator. Outstanding on the mortgage is £84,000.00 I have tried to sell the house and it's not currently had an offer been made. I have decided to look into renting it out and move back in with my parents for a year whilst I start a new career and when I spoke with the Co op yesterday to ask for permission to let the lady advisor couldn't locate a manager and therefore with it being something she was unsure of as they stopped doing guarator mortgages she would call me back. Few hours later she called and said the only way I could do this is by taking my mum off as guarator, I need to write to them with a letter from mum confirming she will come off, 3 month bank and pay slip statements she also said the rate I'm on atm 4.75% would increase by 1% to 5.75% and once I am on this new mortgage its froze I can change to another... Can my mum be left on the mortgage and me come off as my employment history this past two years has been me changing positions as child care is so expense and I'm due start a new position end of April
Keg - 30-Mar-16 @ 12:05 PM
Sherbo - Your Question:
HICan I use my dad as a guarantor to re mortgage a property ?? My salery has gone down and my credit is not the best.Thanks Lee

Our Response:
As specified in the article, it will normally be your parents or another family member that will act as a guarantor. You would have to approach the mortgage companies to see whether it is something they would consider, as not every broker will allow this.
AffordableHomeAdvice - 1-Feb-16 @ 2:43 PM
HI Can I use my dad as a guarantor to re mortgage a property ?? My salery has gone down and my credit is not the best. Thanks Lee
Sherbo - 1-Feb-16 @ 12:27 PM
My dad is age 70 and wants to use his right to buy on his council property, the house is valued at £120,000 and he wants s mirtgage of £35,000 can he apply if myself and my husband stand garantor?
Naid - 16-Jan-16 @ 1:21 PM
balfour - Your Question:
I do not have a mortgage or any monies owed on my house my daughter got the 50 percent of my house from her father after his death it was willed to her it was our wishes that this would be the case in event of one of us passing

Our Response:
Then this should not stop your daughter applying for or being refused a mortgage, especially if she can prove she has equity in the house. I hope this helps.
AffordableHomeAdvice - 8-Jan-16 @ 3:05 PM
i do not have a mortgage or any monies owed on my house my daughter got the 50 percent of my house from her father after his death it was willed to her it was our wishes that this would be the case in event of one of us passing
balfour - 8-Jan-16 @ 2:39 PM
balfour - Your Question:
My daughter has her name on my deeds and holds a 50 percent share of my house will this stop her getting a mortgage in her own right when she decides to buy a house she has a good job and does not need me to be guarantor or any help from me at all

Our Response:
You don't say whether there is a mortgage on the house or not, as this will be taken into consideration if she wishes to borrow further money.
AffordableHomeAdvice - 8-Jan-16 @ 11:26 AM
mydaughter has her name on my deeds and holds a 50 percent share of my house will this stop her getting a mortgage in her own right when she decides to buy a house she has a good job and does not need me to be guarantor or any help from me at all
balfour - 7-Jan-16 @ 4:33 PM
Hi, I am a guarantor on my ex - wife's mortgage. However the time has come when I want to extend my current house but the banks will not lend me the money due to being the guarantor. So at the moment I basically can't move on. At the moment I have said to my ex-wife she needs to start looking at the options to get me off. However I don't think she is really looking to hard so my question is how can I remove myself as the guarantor? I.e force the issue. This is a last resort but if I am not removed I can't move forward with my life.
IvybridgeHatter - 19-Sep-15 @ 10:06 AM
@Sjs121 - you would have to speak to a mortgage company about this. However, due to stricter legislation I imagine the mortgage company will still want to be able to see whether your monthly income and expenditure allows for you to pay back your mortgage, unless your parents are willing to pay the discrepancy on your behalf.
AffordableHomeAdvice - 29-May-15 @ 2:23 PM
Hi, I can't get a big enough mortgage as I don't earn enough as I only work 24 hrs per, but I have a £70k deposit to put down.Can I get a parent who has paid off their mortgage to be aguarantor? The monthly repayments would be far less then if I had to rent and I really don't want my money wasted on renting someone else's house. Many thanks
Sjs121 - 27-May-15 @ 7:49 AM
@Coops - I can't really answer this question as much is dependent upon circumstance; the amount of money you have as a desposit, your financial situation etc. However, a mortgage company will need to see that you have income enough in order to comfortably pay the mortgage and pay bills etc. Getting a mortgage is a lot more tricky than it used to be. You would really need to speak to a mortgage advisor about this.
AffordableHomeAdvice - 30-Apr-15 @ 10:52 AM
As a single parent and carer for my child I can't get a mortgage. I want to move but can't port my mortgage. My mum wants to be a guarantor. As a carer part of my mortgage is payed for by social security. Would this still be able to be paid if my mum is a guarantor
Coops - 27-Apr-15 @ 2:41 PM
@Nic - it would be both of you that would have to be assessed. Mortgage companies have quite stringent assessment methods these days too, which assess all your incomings and outgoings.
Barry - 23-Mar-15 @ 11:47 AM
Hi I am a recent graduate and have only been in full time employment for a few months. My Mum wants me to get on the property ladder and has agreed to be a full guarantor. I have 10% of the deposit. I know I can keep up with the mortgage payments as I am renting at a much higher rate. Would I need to be financially assessed or would it just be my Mum who is assessed for the mortgage if acting as guarantor? Thanks
Nic - 19-Mar-15 @ 2:54 PM
@goldy - there are a few banks and building societies who will offer this service. However, they will want to know that should you not be able to afford the repayments for any unexpected reason that your parents can make the loan repayments should you default.
AffordableHomeAdvice - 9-Mar-15 @ 11:42 AM
Hi, I'm 37yrs old with 3 children and work 2 days a week. With wages, tax benefits and maintenance I have an income of over £2000. All rentals are over £900 for this I feel I could be paying off a mortgage.I have a good sized deposit but can only lend £40,000. My parents are retired but own their own property could they be guarantors as they technically only have a pension income?
goldy - 6-Mar-15 @ 12:29 PM
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