24 Apr 2020, Author:

Dreaming of owning your own home, upgrading to a larger property or re-mortgaging to carry out some home improvements?

Getting onto the property ladder, moving up the ladder from your current home or extending can feel like a distant dream if you’re struggling with poor credit now, or if you’ve experienced bad credit in the past.

However, the home of your dreams doesn’t have to be out of reach. Just like unsecured Guarantor Loans, there are a number of secured Guarantor Mortgages options on the market for both personal and business property buyers. Read our short guide now to find out more.

What is a mortgage guarantor?

A mortgage guarantor is someone who will co-sign a mortgage agreement for a close friend or family member, to allow them to secure the home loan they are looking for. If you’ve had adverse credit in the past, it’s typically easier to be approved for a Guarantor Mortgage than it is than applying on your own, and you can usually access more competitive interest rates and mortgage terms too.

Whilst you are the main borrower and all repayment responsibilities are yours for the term of the mortgage agreement, your mortgage guarantor agrees that if you are ever unable to meet the scheduled repayments, they will take responsibility for meeting the monthly payments.

Having a mortgage guarantor co-sign your application and loan agreement benefits lenders as there’s less risk of late payments, default and non-repayment. It also benefits you, as you have a higher chance of securing the mortgage that you need at a much more favourable interest rate.

Why do people use a Guarantor Mortgage?

People being impacted by past bad credit and achieving home-ownership or purchasing a larger home that better suits their family needs, shouldn’t be mutually exclusive. Everyone wants to have living space that suits their personal circumstances and life needs.

Some of the most common reasons for consumers seeking a Guarantor Mortgage have resulted from them experiencing prior unmanageable financial issues, connected to age or stage in life. A few examples of these include:

  • Missed credit payments or defaults whilst on a limited income whilst studying and this financial history following them several years later when looking to purchase their first family home.
  • A period of redundancy that led to a cluster of short term late payments or defaults on credit obligations then impacting ability to access larger mortgages, years down the line.
  • Family breakdown leading to distressed short term incomes as both partners move from one household and two incomes, to two separate functioning households with separate and more limited incomes.
  • Retirees who don’t meet mainstream lenders lending criteria being excluded from mortgage borrowing, due to income, age bracket or other arbitrary factors.

Thankfully, guarantor mortgages can offer these excluded borrowers more flexibility than mainstream mortgage lenders. Borrowing with a mortgage guarantor makes accessing home loan funds more accessible and affordable to purchasers with less than perfect credit ratings.

Guarantor Mortgage FAQs

  1. Can you get a mortgage with a Guarantor?

Yes, applying for a mortgage with a guarantor makes accessing the funds you need easier than applying on your own. Any credit issues you’ve experienced before aren’t as prohibitive to getting approved as they would if you were applying on your own merit.

  1. Can you get a guarantor mortgage with bad credit?

It may be easier to be approved for a Guarantor Mortgage with bad credit than it is to be approved for a mainstream mortgage. This is because the applicant co-signing the loan’s credit rating is considered as part of your application, diluting the lender’s risk of non-payment.

  1. What are the obligations of the mortgage guarantor?

The person you ask to co-sign your loan agreement is signing a legally binding financial contract. They will be legally obligated to meet your mortgage repayments in the event that you can’t, and must understand that in advance of singing. Please take time to ensure your mortgage guarantor fully recognises the implications of what you are asking them to do and gives full, informed consent to guaranteeing your loan.

Guarantor Mortgage affordability

Before you apply for a Guarantor Mortgage, work out how much you can afford to comfortably repay each month by preparing a monthly budget. Look at your all of your income from your salary, benefits pensions or investments and consider all of your outgoings, from housing and utilities to food, drink, clothing and entertainment. Don’t forget a savings pot and be sure not to overcommit yourself.

Applying for a Guarantor Mortgage

If you’ve been seeking a mortgage through mainstream channels with adverse credit, you may have grown frustrated with the promise of approvals in principle and the best rates on the market. Only to be turned down or offered rates and terms that make monthly repayment exorbitant and unachievable. We have a panel of lenders available who are willing to lend to borrowers of various circumstances.

Whatever your financial circumstances, we’ve made it easier to apply for a Guarantor Mortgage. We offer our clients free and impartial brokerage services from a range of accessible lenders UK-wide, who are authorised and regulated by the Financial Conduct Authority.

Disclaimer: Your home may be repossessed if you don’t keep up repayments on your mortgage.