Getting a mortgage doesn't always need a guarantor. But, they play a very important role for many people, especially first-time buyers who want to climb onto the property ladder.
Let's explore what a guarantor is, why you might need one. We’ll also explore the good and bad points about using a guarantor mortgage.
A guarantor is someone who promises to pay your mortgage if you can't. This means if you miss a payment one month, or for a longer time (maybe because you lose your job), your guarantor must legally pay it for you.
Remember: Becoming a mortgage guarantor is a big responsibility!
If payments aren't made, the bank could take the house away, and both your credit scores will drop. This is why asking someone to be your guarantor—or agreeing to be one—needs careful thought. You both share responsibility for paying the mortgage until it's fully paid off.
People usually need guarantor mortgages when they have a poor credit history.
Banks check many things before giving you a mortgage. They look at whether you can afford it, and how you manage your money. They also examine your credit history.
It can be frustrating if you're handling your money well now but your past mistakes are causing problems. Missed payments on loans, credit cards, or mortgages stay on your credit history for six years and can stop banks from approving you. Even if you can clearly afford the mortgage now, your credit history might block you.
This might lead you to ask someone with good credit to be your guarantor and agree to pay your mortgage if you can't.
Most people choose a close family member — it's a big favour to ask! Some lenders even insist that only relatives can be guarantors.
Parents often become guarantors for their children to help them buy their first home. They might not expect to actually make payments, but they must be prepared to do so if needed.
It’s important you consider both the financial impact, but also the effect on a relationship, that comes with choosing a guarantor.
Remember: Banks will check your guarantor's finances just as carefully as yours. They need to make sure your guarantor can afford to pay your mortgage plus all their own bills (including their own mortgage) if necessary.
While guarantor mortgages exist, they aren't common. Because you have fewer choices of mortgages and lenders, you probably won't find one with a low interest rate.
If you're thinking about a guarantor mortgage because of bad credit, remember that some lenders specialise in helping people in your situation. Talking to a mortgage broker might help you find a better mortgage for your needs.
We hope this helps you understand what guarantor mortgages are, how they work, and the risks involved.
Always think very carefully before asking someone to be your guarantor — and think twice if someone asks you to be theirs. Being a mortgage guarantor is a major commitment and should be treated as such.
Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.
Zubin is a personal finance writer with an extensive background in the finance sector, working across management and operational roles. He applies his experience in customer communication to his writing, with the aim of simplifying content to help people better understand their finances.
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