Guarantor Mortgages are an option for those who may have difficulty obtaining a traditional mortgage, such as those with limited or no deposit, bad credit, or other obstacles. A guarantor mortgage involves having someone else act as a legal guarantor, responsible for repaying the loan should you be unable to. It is typically a parent or close family member that acts as the guarantor.

What does a mortgage guarantor need?

The guarantor will need to have good credit and assets, such as savings or property, to be accepted, as well as stable finances. They may also need to meet certain age requirements, depending on the lender’s criteria. Furthermore, they should not have any plans of taking out a mortgage in the near future as this may interfere with their ability to act as a guarantor for your loan or their ability to get a mortgage of their own.

The guarantor won't be named on the deeds or own any share of the property, they will just be there to help with the affordability aspect of the mortgage if you were ever unable to make your repayments. In most cases, the guarantor doesn't need to do anything, if the mortgage applicant makes all monthly payments. If you miss any payments or default on your mortgage this is when the guarantor becomes liable for any shortfall.

What should I consider when looking at a guarantor mortgage?

Having a guarantor can help you access more money or better rates than you could get with a traditional mortgage, but it also carries risks and should be considered carefully before committing. The lender can take the guarantor’s savings or sell their property if they cannot cover the repayments. They can even repossess the property, though this may not be enough to cover the total loan amount if it has gone into negative equity.

If your guarantor refuses to cover the necessary payments then legal action may be taken against them, the guarantor will be contacted via email/telephone and post before legal action is taken. This means that their finances and property are at more risk due to the monthly payments not being covered.

If your guarantor was to pass away during the term of your mortgage, you may have to find another guarantor, or in some cases, if your financial situation has improved or you have built up equity in your property you may be able to remortgage without a guarantor, you will just need to evidence your affordability. If you have inherited money this could be used to pay off some or all of your mortgage.

In some cases, it may be possible for the guarantor to be removed from your mortgage once you have made all repayments in full for a period of time, or have built up some equity in the property. Different lenders will have different criteria for this, so it is worth shopping around to see which ones are likely to accept you. Ultimately, guarantor mortgages can be beneficial to those who have difficulty getting a traditional mortgage, but it is important to carefully consider the risks before committing.

Joint Borrower, Sole proprietor (JBSP mortgage)

Joint borrower, Sole Proprietor Mortgages is a type of mortgage where not all parties to the mortgage are legal owners of the property. For instance, where there are two borrowers on the mortgage, but only one will be the legal owner and named on the title of the property. Joint Borrower, Sole Proprietor mortgage is different to a joint mortgage. In joint mortgages, all customers are responsible for the mortgage and legally own the property.

The main purpose of a joint borrower, sole proprietor mortgage is to help with affordability. By combining your incomes you can take out a larger mortgage than you would be able to obtain otherwise, without giving away any of your equity or having a person named on your deeds or legal ownership, which could affect the non proprietors stamp duty liability if they were named on the deeds

If you are a first time buyer interested in a guarantor mortgage contact us today at 0151 662 0188 or email [email protected].