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How Do Guarantor Mortgages Work?
A guarantor mortgage is one form of family-assisted borrowing. It can help when a buyer needs additional support to meet a lender’s affordability or deposit requirements. Support can be based on a family member’s income, savings or property, depending on the mortgage structure.
The guarantor’s responsibility will vary between products. In some arrangements, they may be responsible for missed payments or allow savings or property to be used as security for the loan. Lenders will assess the circumstances of both the buyer and the supporting family member.
Before applying, it is important to understand the potential risks, how the arrangement will work in practice and what may need to happen before the family member can be released. Our Scottish mortgage advisers can talk you through the available routes and help you make an informed decision.
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accessible by The Mortgage Broker ScotlandWhat Should a Guarantor Be Aware Of?
Acting as a guarantor isn’t just a formality to help someone secure a mortgage. It means you may have to step in financially if they fall behind on their payments.
The support can work in different ways. A lender may consider your income as part of the affordability assessment, hold your savings as security, or use your property as part of its security for the mortgage. What you are responsible for will depend on the lender and the type of arrangement being considered.
Before you agree, take time to go through the details so you’re clear on what you’re committing to. There is no standard guarantor agreement, so it is sensible to take your own legal advice before proceeding, particularly where your savings or property are being used as security.
Who May Consider a Family-Assisted Mortgage?
A family-assisted mortgage may be considered by:
- First-time buyers whose income, deposit or affordability does not yet meet lender criteria alone
- Buyers with family members willing and able to provide suitable financial support
- Buyers comparing JBSP, savings-backed and property-backed arrangements
- Applicants with more complex circumstances who want to discuss their options with an adviser
Having a guarantor does not guarantee that a mortgage will be approved. Lenders will still carry out their own affordability, credit and eligibility checks.
Types of Guarantor Mortgage in Scotland
Income-supported (Guarantor or JBSP)
In this setup, the guarantor’s income is used to support affordability. They may be jointly responsible for the mortgage repayments, depending on the structure.
The guarantor is usually not named on the property deeds, although they remain legally linked to the mortgage agreement.
Savings-backed (Springboard-style)
A family member provides savings as security for the mortgage, and these funds are held by the lender for a fixed period as security against the loan. Once certain conditions are met, the savings are returned.
Property-backed (Family Guarantee)
A family member uses equity in their own property as security. This can support higher borrowing levels or reduce deposit requirements.
The guarantor’s home is used as part of the lender’s security, which increases the level of risk for them.
Key Criteria and Considerations for Borrowers and Guarantors
A family-assisted mortgage should be considered from both perspectives. The lender will assess the buyer, the person providing support, and the type of arrangement being proposed.
Both the applicant and the guarantor are assessed by the lender. The guarantor must show they can manage their own financial commitments alongside the mortgage arrangement.Affordability
Age Limits and Term
Some lenders apply age limits to guarantors. In some cases, the mortgage term must end before the guarantor reaches a set age.
Many lenders allow borrowing up to around 90 percent loan to value, depending on the product and circumstances. Some family guarantee structures may allow higher borrowing, subject to stricter criteria.Loan to Value
Occupation and Future Affordability
Some lenders expect the main applicant to show a realistic path to taking full responsibility for the mortgage in the future. This is more common in long-term arrangements.
The level of responsibility for the guarantor depends on the mortgage type. It can range from limited support through savings, to full liability for repayments if the borrower cannot pay.Liability
Yes, your guarantor can be removed by remortgaging the property. This normally requires the borrower’s income or financial position to have improved, or enough equity to be built up in the property. In many cases, this is reviewed after a few years, often around 3 to 5 years, depending on the mortgage and lender criteria. It’s vital to take this into account when planning the direction you want to go in with your mortgage, and think strategically about when you might be able to release the guarantor from the agreement.Can the Guarantor Be Removed?
Potential Alternatives to a Guarantor Mortgage
A guarantor mortgage is not the only way a family member may be able to provide support. The right option will depend on the buyer’s circumstances, the family member’s resources and the lender’s criteria.
Gifted Deposit
A family member provides a deposit without expecting repayment. Most lenders accept this, provided a declaration confirms the funds are a gift and not a loan.
Remortgaging to Support a Deposit
Family members may release equity from their own property to help raise a deposit. This can be done through a remortgage, further advance, or a second charge loan. Costs, age, and affordability need to be considered before choosing this route.
Why Choose The Mortgage Broker for Bad Credit Mortgages in Scotland?
A bad-credit mortgage is rarely a simple yes-or-no. We look at what happened, when it happened, whether it has been settled and how the repayments would fit alongside your other commitments.
Your Circumstances Come First
We start with a proper conversation about your credit history, income, deposit and property plans.
Clear, Honest Advice
We explain what may be worth exploring, what could make an application difficult and whether waiting could improve your options.
Access to 130+ Lenders
We search a wide range of lenders, including options not always available on the high street.
Support With Your Application
If you proceed, we handle the application, respond to lender queries and work alongside your solicitor.
Support From Start to Finish
We keep you informed as your purchase moves from application through to mortgage offer and completion.
FCA-Regulated Advisers
Your adviser will explain their recommendation, the reasons for it and any advice fee before an application is submitted.
You can have an initial chat with us at no cost and without committing to anything. Tell us what has happened, and we’ll talk you through the options that may be open to you.
Our Team of Scottish Guarantor Mortgage Experts
Meet our team of Scottish mortgage experts based in and around Edinburgh, ready to help you reach your goals in property.
Rob McCraw
Mortgage Advisor
Luka Brudar
Mortgage and Protection Adviser
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