Guarantor Mortgages

A Guarantor Mortgage is designed generally for young professionals who would like to take out a mortgage on a property but due to its value and mortgage repayments they are unable to cover, based on their own current income and/or assets.

So some mortgage lenders will give assistance for first-time buyers by lending them more than they would usually allow, provided that a parent or guardian agrees to stand guarantor of the mortgage. This means that, if the first time buyer does not manage to make a monthly repayment, the parent or guardian is responsible for paying the lender.

The guarantor's income is used to guarantee the mortgage rather than the Purchaser's income but the lender will still need to know the First Time Buyers/Purchaser's income and many lenders will only lend to young professionals who can demonstrate that their pay over the forthcoming years will increase to then be able to make payments in future years without the need for the guarantor.

The lender will need to be satisfied that the parent or guardian could afford to take on this additional responsibility as well as their own residential mortgage if they have one. They will look at the parent's income, their own mortgage payments (again if they have one) and then calculate how much they will lend you for your guarantor mortgage on that basis. The guarantor will be liable for the mortgage and would have to pay the lender any mortgage payments not made by the purchaser. However, the mortgage is held solely in the purchaser's name, with the guarantee being taken over a percentage of the property's value. As the guarantor's legal position is quite complicated, independent legal advice must be taken prior to arranging this type of mortgage.

A Guarantor mortgage does enable you to get onto the property ladder sooner than you would be able to if based on your own salary, it can allow you to purchase a property of higher value than you perhaps could have done on your own earnings but this can sometimes overstretch the purchaser and of course should any payments be missed cause potential damage to the family relationship.

Our specialist advisors at Grovelawn will be happy to explain the guarantor mortgage process to you in full and give you quotes on the most suitable products that would be available to you.

Your property may be repossessed if you do not keep up repayments on your mortgage.

For more information on how we are paid for mortgages please click here.

Grovelawn Financial Services, 1C Restormel Industrial Estate, Liddicoat Road, Lostwithial PL22 0HD — T: 01208 872689