In an increasingly challenging housing market, many prospective homebuyers in the UK are turning to family-assisted mortgage arrangements, often referred to as guarantor mortgages, to help secure their first home. 

While this type of mortgage can offer significant benefits, it also comes with notable risks and responsibilities that must be fully understood by both parties.

What is a Guarantor Mortgage?

A guarantor mortgage is a home loan that involves a third party, usually a close family member, agreeing to support the mortgage application and cover repayments if the borrower is unable to do so. In recent years, traditional guarantor mortgages have become less common. 

Many lenders now offer alternative structures such as Joint Borrower Sole Proprietor (JBSP) mortgages or family boost products, where the supporter does not legally co-own the property but shares liability for the debt.

These arrangements are designed to help borrowers who may have limited credit history, a small deposit, or who do not meet standard affordability criteria. By leveraging the guarantor’s financial strength, the borrower may be able to access a larger loan or better interest rate than they would be offered individually.

How Do Guarantor-Style Mortgages Work?

In most cases, the guarantor does not become a co-owner of the property but is legally responsible for the mortgage if the borrower cannot meet repayments. Depending on the lender and the product type, the guarantor’s support may be backed by a charge over their savings (for example, in a savings-as-security mortgage) or even secured against their own home through a legal charge.

The guarantor remains liable until a pre-agreed point, typically when the borrower has built up sufficient equity in the property or demonstrated the ability to meet repayments independently. It’s important to note that the guarantor's liability is not always automatically removed at a set point; both parties should clarify the terms with the lender and adviser.

What are the Advantages?

For borrowers, these mortgage types can serve as a vital gateway to homeownership, especially in high-cost areas. With a guarantor or supporting party, some lenders may accept a lower deposit, commonly around 5%, or improve affordability assessments based on joint income, even though the guarantor does not reside in the property. 

In rare cases, some lenders offer 100% mortgages, but these are typically linked to savings held as security and are only available under specific criteria.

The backing of a guarantor may also result in access to more favourable interest rates than those typically offered to borrowers with limited borrowing history or smaller deposits.

From the lender's perspective, these arrangements reduce the risk of default by providing an extra layer of financial security.

Guarantor Mortgages – Risks and Responsibilities

Although these mortgages can open doors for borrowers, they carry significant risks, particularly for the guarantor. If the borrower fails to make repayments, the guarantor is legally bound to cover them. 

Where the mortgage is secured against the guarantor’s savings or property, this could result in restricted access to funds or, in extreme cases, repossession of the guarantor’s home.

These financial obligations can last for several years, and guarantors must be confident in the borrower’s ability to meet repayments. Legal and financial advice is strongly recommended before entering such an agreement.

For borrowers, while family assistance can ease entry into the housing market, it also brings a responsibility to protect the guarantor’s financial position by ensuring consistent and timely mortgage payments.

Burcu Kaya, a regulated Mortgage & Protection Adviser based in Enfield Town, North London, said: 

“Both borrowers and guarantors must fully understand the commitments and risks involved. As with any financial product, seeking professional advice and thoroughly assessing one's financial situation and the implications of a guarantor mortgage are essential steps before proceeding. This balanced approach ensures that the benefits can be reaped without undue risk to any party involved.”

In Summary

Family-backed and guarantor-style mortgages offer a valuable opportunity for many aspiring homeowners in the UK, especially those struggling to meet standard mortgage criteria. 

However, the financial risks to both parties should not be underestimated. The support of a guarantor can be transformative, but only when all parties fully understand the legal and financial implications.

Always seek advice from a qualified, regulated mortgage adviser before proceeding with any such mortgage. Each lender’s criteria and terms can vary significantly, and what suits one family may not suit another.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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Thomas Oliver UK LLP is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.

Approved by The Openwork Partnership on 20/08/2025.