Guarantor Mortgages – What Are They and How Do They Work?

For many people, buying a home is a significant milestone in their lives. However, the process of securing a mortgage can be daunting, especially for first-time buyers or those with a limited deposit. This is where guarantor mortgages can come in handy.

A guarantor mortgage is a type of mortgage where a family member or friend guarantees the repayments on the loan in case the borrower defaults. This means the guarantor is responsible for paying the mortgage if the borrower can’t. This type of mortgage can be a good option for those who may not get a mortgage on their own, such as first-time buyers or those with a limited deposit.

At Status Mortgages, we understand the challenges of buying a home and the importance of finding the right mortgage for your needs. Guarantor mortgages are a niche product and not offered by all lenders. Therefore, it’s crucial to seek advice from a mortgage adviser who understands this type of mortgage.

In this blog, we’ll look at guarantor mortgages, including how they work, who they’re suitable for, and the benefits they offer. We’ll also discuss the common questions people have about guarantor mortgages, and provide advice on finding the right guarantor mortgage for your needs.

What is a guarantor mortgage?

Unlike other types of mortgages, guarantor mortgages provide additional security to the lender, making them more willing to lend to borrowers with limited deposits or those who may not meet the lender’s criteria. Guarantor mortgages are also a good option for those with a low income, as they can borrow more than they would with a standard mortgage.

A guarantor can be a parent, grandparent, or close relative with a good credit score and is willing to guarantee the mortgage payments. They will need to undergo the same affordability checks as the borrower, and will need enough income to cover the mortgage payments if the borrower is unable to do so.

There are two types of guarantor mortgages: limited and unlimited guarantee. A limited guarantee means the guarantor is only responsible for a portion of the mortgage, usually between 20-25% of the property’s value. An unlimited guarantee means the guarantor is responsible for the entire mortgage amount. 

How do guarantor mortgages work?

Guarantor mortgages are structured in a way that allows a borrower to secure a mortgage with a smaller deposit or with limited credit history. The amount of deposit required depends on the lender and type of guarantor mortgage, but typically ranges from 5% to 20% of the property value.

The loan-to-value ratio (LTV) is also an important factor in guarantor mortgages. The LTV is the amount of the mortgage loan as a percentage of the property value. For example, if the property is valued at £200,000 and the mortgage is for £180,000, the LTV is 90%. In most cases, lenders will limit the LTV on a guarantor mortgage to 100% or less, depending on the type of guarantee.

The interest rate on a guarantor mortgage is usually higher than a standard mortgage, due to the added risk for the lender. However, the interest rate may still be lower than other types of high-risk loans, such as a personal loan or credit card.

The guarantor’s income and creditworthiness are assessed to determine their ability to repay the mortgage in the event that the borrower defaults. The guarantor’s income is usually required to be a certain amount above the mortgage payment to ensure they have sufficient funds to cover the repayments.

If the borrower defaults on their mortgage payments, the guarantor is legally responsible for paying the outstanding balance. This can have serious implications for the guarantor’s credit score and financial well-being. It’s essential that both the borrower and guarantor fully understand the implications of a guarantor mortgage before entering into the agreement.

Guarantor Mortgages

Who is eligible for a guarantor mortgage?

While a guarantor mortgage can be an excellent option for many borrowers, it’s important to note that not everyone will be eligible. Lenders typically have strict criteria for granting a guarantor mortgage, and borrowers must meet certain requirements.

First-time buyers, self-employed individuals, and those with a low deposit are among the typical profiles of borrowers who may benefit from a guarantor mortgage. These borrowers may find it challenging to secure a mortgage on their own, and a guarantor mortgage can help bridge the affordability gap.

However, lenders will also assess the borrower’s income, credit score, and other factors to determine their eligibility for a guarantor mortgage. The guarantor’s income and creditworthiness will also be evaluated, as they will be jointly liable for the mortgage.

It’s crucial to seek advice from a mortgage adviser who understands guarantor mortgages and can help determine if this type of mortgage is suitable for your specific circumstances. They can also help you navigate the lender’s criteria and find the right guarantor mortgage product for your needs.

Pros and cons of guarantor mortgages

Guarantor mortgages have both advantages and disadvantages that borrowers should be aware of before considering this type of mortgage.


  • Lower Deposit Requirement: One of the significant advantages of a guarantor mortgage is that it allows borrowers to purchase a property with a lower deposit amount. This is particularly helpful for first-time buyers who may struggle to save a significant deposit.

  • Better Mortgage Rates: Lenders may offer better interest rates on guarantor mortgages, since the loan is considered less risky due to the guarantor’s involvement.

  • Opportunity to Build Credit History: A guarantor mortgage can help borrowers build their credit history by making regular mortgage payments on time.



  • Strain on Relationship: The borrower and the guarantor need a close relationship, since the guarantor takes on significant risk. If the borrower defaults on their mortgage payments, it may create tension and damage the relationship between them.

  • Potential Liability: If the borrower is unable to make their mortgage payments, the guarantor may be held responsible for repaying the debt. This can lead to financial strain and damage to the guarantor’s credit score if they are unable to repay the loan.


It’s essential to consider both the pros and cons of guarantor mortgages, and to seek advice from a mortgage adviser to understand if this is the right option for your specific circumstances.



In summary, guarantor mortgages are a valuable tool for borrowers who may not have the deposit or credit score required to secure a mortgage on their own. By having a guarantor with a solid financial standing, borrowers can access better mortgage rates and build their credit history. However, it’s important to remember that guarantor mortgages come with their own risks, such as the potential for a strain on the relationship between the borrower and guarantor, and the guarantor’s liability if the borrower defaults on their mortgage payments.

As with any mortgage product, it’s essential to seek advice from a qualified mortgage adviser who understands the intricacies of guarantor mortgages. At Status Mortgage Services, our team of expert advisers is well-versed in helping borrowers navigate the complexities of guarantor mortgages. We can help you determine if this type of mortgage is right for your situation, and guide you through the application process.

If you’re interested in learning more about guarantor mortgages or have any questions about the mortgage process, please don’t hesitate to get in touch with us today. We look forward to helping you achieve your dream of homeownership.



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