Guarantor Mortgage for First-Time Buyers: 2025

If you are a first-time buyer struggling to get a mortgage — whether because of a small deposit, limited income, or a thin credit history — a guarantor mortgage could help you get on the property ladder. These products allow a family member to support your application by backing it with their own finances, making lenders more willing to approve you.

In this guide, we explain how guarantor mortgages work, the different types available, the risks involved, and whether they are the right option for your situation.

What is a guarantor mortgage?

A guarantor mortgage is a type of home loan where a third party — usually a parent or close family member — agrees to cover your mortgage payments if you are unable to make them. The guarantor does not own any share of the property. They simply provide additional financial security to the lender, which makes it possible for you to borrow more than you could on your own, or to access a mortgage that might otherwise be declined.

There are several variations of guarantor mortgages, but the common thread is that someone else takes on responsibility for your debt if things go wrong. This is a serious commitment, and both the buyer and the guarantor need to understand exactly what is involved.

Key features of a guarantor mortgage:

• The buyer takes out the mortgage and owns the property in their name only
• The guarantor agrees to cover payments if the buyer defaults
• The guarantor’s income, savings, or property may be used as additional security
• The guarantor does not live in the property and has no ownership rights
• If the buyer makes all payments as agreed, the guarantor is never called upon to pay anything

Types of guarantor mortgage

There is no single guarantor mortgage product — different lenders offer different structures. Understanding the types available helps you choose the right approach.

Income-based guarantor mortgages — the guarantor’s income is considered alongside the buyer’s income for affordability purposes. This allows the buyer to borrow a higher amount than their own income would support. The guarantor agrees to cover payments if the buyer cannot, but their property or savings are not typically used as direct security.

Savings-based guarantor mortgages — the guarantor deposits a sum of money (typically 10% to 20% of the property’s value) into a savings account linked to the mortgage. This money is held as security for a set period — usually three to five years. If the buyer keeps up with payments, the savings are returned to the guarantor with interest. This is similar to a family springboard mortgage.

Property-based guarantor mortgages — the guarantor uses their own property (usually their home) as additional security against the buyer’s mortgage. This means the lender could, in theory, take action against the guarantor’s property if the buyer defaults. This carries the highest level of risk for the guarantor.

Joint Borrower, Sole Proprietor (JBSP) mortgages — while technically not a guarantor mortgage, JBSP mortgages serve a similar purpose. A family member goes on the mortgage as a joint borrower (their income is used for affordability) but is not named on the property title. This means the property belongs to the buyer alone, but the family member is jointly responsible for the debt.

How do lenders assess a guarantor mortgage?

When you apply for a guarantor mortgage, the lender assesses both the buyer and the guarantor. Here is what they typically look at.

For the buyer:

• Your income and employment status
• Your credit history and credit score
• Your existing debts and financial commitments
• The property you wish to purchase (value, type, location)
• Your age and the proposed mortgage term

For the guarantor:

• Their income and employment status (or pension income if retired)
• Their credit history
• Their existing debts, including any mortgages on their own property
• The value of their savings or property (depending on the type of guarantee)
• Their age — some lenders have maximum age limits for guarantors

Both parties must be able to demonstrate that they can afford the commitment. The lender will also typically require the guarantor to take independent legal advice to ensure they fully understand the risks and implications before proceeding.

Use our affordability calculator to get an initial estimate of what you might be able to borrow, both with and without a guarantor.

Benefits of a guarantor mortgage

For first-time buyers, a guarantor mortgage can open doors that would otherwise remain closed.

Higher borrowing — by including a guarantor’s income in the affordability assessment, you may be able to borrow enough to purchase a property that would be out of reach on your own. This is particularly useful in expensive areas where property prices significantly exceed what a single income can support.

Lower or zero deposit — some guarantor mortgage products allow you to buy with a very small deposit, or even no deposit at all, because the guarantor’s savings or property provide the security that would normally come from a deposit.

Better interest rates — having a guarantor reduces the lender’s risk, which can sometimes translate into more competitive interest rates compared to high LTV products available to borrowers without a guarantor.

A stepping stone to independence — guarantor arrangements are usually temporary. After a few years of making reliable payments and building equity, you can typically remortgage onto a standard product without the guarantor’s involvement.

The guarantor retains their assets — unlike a gifted deposit, where the family member gives money away permanently, many guarantor arrangements allow the guarantor to keep their savings or property. The security is only accessed if the buyer defaults.

Risks and considerations

A guarantor mortgage involves significant risks, particularly for the guarantor, and these must be carefully considered.

Risks for the guarantor:

• Financial liability — if the buyer cannot make payments, the guarantor must. This could mean covering mortgage payments from their own income, which may be difficult if they have their own financial commitments
• Property at risk — if the guarantee is secured against the guarantor’s home, they could face repossession proceedings if the buyer defaults and the guarantor cannot cover the payments
• Savings at risk — with savings-based guarantor mortgages, the guarantor’s deposit could be used to cover shortfalls if the buyer defaults or the property falls into negative equity
• Impact on borrowing capacity — acting as a guarantor affects the guarantor’s own ability to borrow. Lenders will treat the guarantee as a financial commitment when assessing the guarantor for any future credit applications
• Relationship strain — money and family can be a difficult combination. If things go wrong, the financial pressure can damage family relationships

Risks for the buyer:

• Pressure to maintain payments — knowing that a family member’s finances are on the line can add emotional pressure, particularly during difficult financial periods
• Limited lender choice — not all lenders offer guarantor mortgages, so your product options may be more limited than with a standard mortgage
• The underlying affordability question — if you need a guarantor because you cannot afford the mortgage on your own, you should carefully consider whether the commitment is sustainable long term

Alternatives to guarantor mortgages

Before committing to a guarantor arrangement, it is worth considering whether alternative options might be more suitable.

Gifted deposit — a family member gives you money towards your deposit. This is simpler and gives you access to the full range of mortgage products. The downside is that the family member does not get their money back. Read our guide to gifted deposit mortgages.

Shared ownership — buying a share of a property reduces the deposit and mortgage amount needed, potentially making a mortgage affordable without a guarantor. See our shared ownership guide.

Lifetime ISA — if you have time before buying, saving into a Lifetime ISA provides a 25% government bonus on contributions up to £4,000 per year, boosting your deposit.

Government schemes — several government schemes for first-time buyers can help reduce the amount you need to borrow or save.

95% LTV mortgages — if you can save even a 5% deposit, you can access a wide range of mortgage products without needing a guarantor. Use our mortgage calculator to see what the payments would look like.

Adverse credit specialists — if your mortgage difficulty is related to credit history rather than income, speaking to a broker who understands adverse credit lending may open up options you were not aware of.

How to apply for a guarantor mortgage

If you decide a guarantor mortgage is the right option, here is how the process typically works:

1. Speak to a mortgage broker — guarantor mortgages are a specialist area, and not all lenders offer them. A broker can identify the right product for your circumstances and guide both you and your guarantor through the process
2. Both parties gather documentation — you will both need proof of identity, address, income, bank statements, and details of existing financial commitments
3. Get an agreement in principle — this confirms how much the lender is willing to offer, based on both your circumstances
4. Find a property — with your agreement in principle, you can search and make offers with confidence
5. The guarantor takes independent legal advice — this is a requirement for most lenders. A solicitor will explain the risks and responsibilities to the guarantor and confirm they understand what they are agreeing to
6. Submit the full application — your broker handles the paperwork and liaises with the lender
7. Completion — the guarantor’s security (savings, property charge, or income commitment) is formalised, and you complete your purchase

The process is straightforward, but it is essential that both parties are fully informed and comfortable with the arrangement before proceeding.

Use our stamp duty calculator to check what stamp duty you will owe — remember that first-time buyers pay no stamp duty on the first £300,000 of the purchase price. Our repayment calculator can help you model different payment scenarios.

Get expert advice on guarantor mortgages

Guarantor mortgages can be an excellent way for first-time buyers to get onto the property ladder with family support, but they are not right for everyone. The risks and commitments involved mean it is essential to get professional advice before proceeding.

At Option Finance, our experienced mortgage advisers can assess your situation, explain all the options available, and help you and your family member find the most suitable and affordable solution. Whether a guarantor mortgage, a gifted deposit, or another route is best for you, we will guide you through every step.

Apply now to speak with one of our first-time buyer mortgage specialists and explore your options.