keys icon

Best Guarantor Mortgages

If you don't have a deposit for a mortgage, you may still be able to get on the property ladder with the help of a guarantor. Parents and family members are common choices. Sometimes called no deposit mortgages, guarantor mortgages are most commonly used by first time buyers. View today's best rates below. 

Advertisement

Compare mortgage terms

Best Guarantor Mortgages

Best Guarantor Mortgages

Press to increase amount Press to decrease amount
Press to increase value Press to decrease value

We found 14 products in total, of which 0 have links to providers.

Press for help tip

Selecting ‘Provider Links First’ brings all products that you can apply for directly via Moneyfacts to the top of the chart in rate order. Products that do not have an ‘Go To Provider's Site’ button will appear below, again in rate order. Selecting an option from the drop-down will change the chart to list all products in order depending on the option you have selected, with the best rate being at the top. Products that have ‘Go To Provider's Site’ links will still be in the list but in rate position.

We are searching our databases for your products...

  • Halifax Fixed
    Rate
    5.10%
    5.10% Fixed to 31/08/2027
    reverting to 8.74%
    APRC
    7.9%
    Max LTV
    100%
    Product Fees
    £0.00
    Initial Payment
    £991.92
    Total Over
    Speak To A Broker
  • Vernon BS Discounted Variable
    Rate
    5.40%
    5.40% Discounted Variable (collared at 3.00%) (2.70% disc)
    APRC
    5.6%
    Max LTV
    100%
    Product Fees
    £0.00
    Initial Payment
    £1,021.66
    Total Over
    Speak To A Broker
  • Skipton BS Fixed
    Rate
    5.55%
    5.55% Fixed to 31/08/2029
    reverting to 6.79%
    APRC
    6.4%
    Max LTV
    100%
    Product Fees
    £0.00
    Initial Payment
    £1,036.69
    Total Over
    Speak To A Broker
  • Buckinghamshire BS Discounted Variable
    Rate
    5.79%
    5.79% Discounted Variable (collared at 2.50%) for 3 years (3.00% disc)
    reverting to 8.79%
    APRC
    8.3%
    Max LTV
    100%
    Product Fees
    £999.00
    Initial Payment
    £1,060.96
    Total Over
    Speak To A Broker
  • Buckinghamshire BS Discounted Variable
    Rate
    5.79%
    5.79% Discounted Variable (collared at 2.50%) for 3 years (3.00% disc)
    reverting to 8.79%
    APRC
    8.3%
    Max LTV
    100%
    Product Fees
    £999.00
    Initial Payment
    £1,060.96
    Total Over
    Speak To A Broker
  • Barclays Mortgage Fixed
    Rate
    5.84%
    5.84% Fixed to 30/09/2029
    reverting to 7.74% Variable (collared at 2.49%)
    APRC
    7.1%
    Max LTV
    100%
    Product Fees
    £0.00
    Initial Payment
    £1,066.05
    Total Over
    Speak To A Broker
  • Tipton & Coseley BS Discounted Variable
    Rate
    5.89%
    5.89% Discounted Variable (collared at 3.49%) (2.70% disc)
    APRC
    6.1%
    Max LTV
    100%
    Product Fees
    £999.00
    Initial Payment
    £1,071.16
    Total Over
    Speak To A Broker
  • Beverley BS Discounted Variable
    Rate
    5.89%
    5.89% Discounted Variable (collared at 2.50%) for 3 years (2.35% disc)
    reverting to 8.24%
    APRC
    7.9%
    Max LTV
    100%
    Product Fees
    £995.00
    Initial Payment
    £1,071.16
    Total Over
    Speak To A Broker
  • Buckinghamshire BS Fixed
    Rate
    5.99%
    5.99% Fixed to 31/05/2029
    reverting to 8.79%
    APRC
    7.9%
    Max LTV
    100%
    Product Fees
    £999.00
    Initial Payment
    £1,081.40
    Total Over
    Speak To A Broker
  • Buckinghamshire BS Fixed
    Rate
    5.99%
    5.99% Fixed to 31/05/2029
    reverting to 8.79%
    APRC
    7.9%
    Max LTV
    100%
    Product Fees
    £999.00
    Initial Payment
    £1,081.40
    Total Over
    Speak To A Broker
Representative Example
Note

Mortgage Advice Bureau offers fee free mortgage advice for Moneyfacts visitors that call on 0808 149 9177 or email moneyfacts@mab.org.uk. If you contact Mortgage Advice Bureau outside of these channels you may incur a fee of up to 1%.

Any contractual relationship will be with Mortgage Advice Bureau.

Disclaimer

Credit will be secured by a mortgage on your property. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Written quotations are available from individual lenders. Loans are subject to status and valuation and are not available to persons under the age of 18. All rates are subject to change without notice. Please check all rates and terms with your lender or financial adviser before undertaking any borrowing.

Provider Links

‘Go To Provider's Site’ links are where we have an arrangement with a provider so you can move directly from our site to theirs to view more information and apply for a product. We also use ‘Speak to A Broker’ links where we have an arrangement with a preferred broker to move you directly to their site. Depending on the arrangement we may receive a modest commission either when you press a 'Go To Provider's Site' or 'Speak To A Broker' button, when you call an advertised number or when you complete an application following a link from our website.

Guarantor mortgages explained

What are guarantor mortgages?

A guarantor mortgage (also known as a no deposit mortgage) can help those that would otherwise be unable to buy a house by requiring someone to act as a guarantor. The guarantor would be required to put up their property or savings as security in lieu of a deposit by the borrower. Parents or other family members are common choices to act in this capacity.

Who needs a guarantor mortgage?

Guarantor mortgages are designed to help those who either do not have a good enough credit score to obtain a mortgage on their own or lack the normal 5% minimum deposit. While this can include people who have a poor credit history, it can also be applied to those who are too young to have built up a sufficient credit score – for example, parents may want to secure a guarantor mortgage for their child who is only just 18 or has never used credit before.

Guarantor mortgages might be suitable for:

  • Individuals with a bad credit history
  • People who have little or no credit history (through not having used any credit before)
  • Those with no or less than 5% deposit
  • Those who want to buy a more expensive property than they can afford or have a deposit for

Guarantor mortgages for first time buyers

Can first-time buyers get a 100% mortgage? Yes, there are some mortgages available for first-time buyers, which don’t require the borrower to put up a deposit. There aren’t many, but they do exist! There are certain advantages to no-deposit mortgages, most prominently the fact that you’d be able to buy your first home without having to hand over a whole lot of cash upfront. Your savings can then be used towards other costs, such as moving, renovations and furniture. 

Receive the latest news, straight to your inbox

All of our newsletters are available free by email to all Moneyfactscompare.co.uk users.

Send me Weekend Moneyfactscompare, Savers Friend, Companies Friend and selected third-party offers.

Family offset mortgages can reduce your mortgage interest costs

This type of guarantor mortgage sees a family member place their cash savings into a savings account that is linked to your mortgage. The savings balance is deducted from your mortgage, reducing the amount of interest you pay.

The family member depositing the money will get their money back eventually, as long as the mortgage is repaid. However, they may not be able to earn any savings interest on the amount deposited (if they can, the interest rate will typically be low) and they typically won’t be able to access their funds for a pre-agreed number of years, or until the outstanding mortgage balance reaches a set percentage of the property. If the property is repossessed, the lender will sell the property to recover the value of the mortgage and, if it’s sold at an amount lower than the mortgage, they could recoup any difference from the guarantor’s savings.

 

Collateral charge guarantor mortgages

An alternative to asking a guarantor to put some of their savings in a linked savings account is putting a legal charge on their own property to act as collateral. For example, mortgage lenders may ask to secure 20% of the amount you’re asking to borrow against your guarantor’s property, provided the guarantor in question owns a substantial part of their home outright. The 100% LTV mortgage lender may impose a maximum combined LTV on the guarantor’s original mortgage and the new charge amount – this is likely to be around 65%. The charge will typically remain on the property until a certain percentage of the new mortgage has been paid off.

This form of guarantor mortgage can be a viable option for those who want to help family members but don’t have the cash to gift, particularly if they’ve got significant property assets.

Should I speak to a mortgage broker?

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

 

Speak to an award-winning mortgage broker today

 

MAB is the preferred mortgage broker of MoneyfactsCompare

 

Mortgage Advice Bureau logo

Get friendly, expert advice free of charge as a visitor of MoneyfactsCompare

Mortgage Advice Bureau have 1,600 UK advisers with 200 awards between them.

Speak to an award-winning mortgage broker today.

Call 0808 149 9177 or request a callback

Mortgage Advice Bureau offers fee free mortgage advice for MoneyfactsCompare visitors that call on 0808 149 9177. If you contact Mortgage Advice Bureau outside of these channels you may incur a fee of up to 1%. Lines are open Monday to Friday 8am to 8pm and Saturday 9am to 1pm excluding bank holidays. Calls may be recorded.

Your home may be repossessed if you do not keep up repayments on your mortgage.

What happens if you can’t make the repayments on a guarantor mortgage?

  • Initially, the mortgage lender may give you more time to make your repayments and agree a repayment plan to get you back on track.
  • There may be fees as a result of late or no payment.
  • You could ask your guarantor to make the payments until your finances improve.

If you still remain in financial difficulty, then a lender might choose to:

  • Approach the guarantor to pay (if they haven’t been already).
  • Take money from the guarantor’s savings account (if this was used for the guarantor mortgage).
  • Extend the time the guarantor cannot withdraw their savings.
  • Repossess the property and, if this does not pay back the mortgage balance in full, use the guarantor’s savings or repossess their property held as security.

As you can see, failing to meet your guarantor mortgage repayments not only has serious ramifications for you, but also those acting as your guarantors.

Does the guarantor of my mortgage own part of my house?

Being named as guarantor does not mean that they own a portion of the property. The name on the deeds will be that of the borrower only. In addition, being a guarantor does not mean that they have any right of access to the property the mortgage is secured against.

Negative Equity

There is a risk to borrowers that if property prices fall, they could owe more than 100% of its value. This is known as being in negative equity. This is a problem, but only if you are considering remortgaging or moving home (assuming you can keep up the regular monthly repayments). As most lenders will be reluctant to let anyone with negative equity switch to a new deal, you will likely end up on your lender’s standard variable rate. One way to get out of this is to overpay your mortgage. However, not everyone can afford to do this.

Other considerations

If you’re considering taking out a mortgage without using a deposit, you may not have much in the way of savings, so it’s important to understand all the costs associated with buying a home, making sure you can meet them. It is impossible to list all the costs you may have to meet as these are likely to vary, but there are some general things to keep in mind.

Given their status as mortgages for those who don’t have any other option, it’s not surprising to find that 100% mortgage products tend to come with higher interest rates and fees than other mortgage types. Those with a lack of savings should also remember that there will still be other costs to pay upfront, such as stamp duty and conveyancing fees for those moving. There may also be early repayment charges to pay for those remortgaging.

What are the risks of being a guarantor?

To be a guarantor the individual must:

  • Be a homeowner with at least 30% equity in their home.
  • Have an income high enough to cover the mortgage payments in the event that the borrower cannot or does not pay, while also covering their own outgoings (e.g. their own mortgage, bills and other living costs).
  • Be able to demonstrate their ability to meet credit agreements by having a strong credit record that shows lenders they are a ‘safe bet’.
  • Be willing to show proof that they have taken legal advice, as many lenders require this as part of the application process.
  • Beware that there may also be an age restriction on those willing to act as guarantor.

As the guarantor’s home or savings are put up as collateral against the loan, the biggest risk for a guarantor would be losing their home or savings if the main borrower does not meet their obligations. This is why it’s really important that individuals weigh up their options before agreeing to become a guarantor for someone, whether a parent, a family friend or similar.

Pros and cons of guarantor LTV mortgage

  • Buy a home without a deposit. If you don't have savings, a guarantor mortgage could get you on the property ladder.
  • Potential savings. If you currently pay rent, you'll be able to stop paying this sum, which can be higher than mortgage repayments, and instead invest it into homeownership.
  • You need a guarantor. They'll have to put up their property or savings as security for you to take out this type of mortgage.
  • Higher interest rates and fees. Guarantor mortgages are 100% LTV products and often have higher interest rates than the lower LTV alternatives.
  • Potential for negative equity. If the value of your property falls, you could end up owing more than it's worth.

Alternatives

While it’s important to compare the few 100% mortgages available to make sure you are getting the best possible deal, it may be a good idea to also look at alternatives. If you are a homeowner who’s lost some of the value in their home, you may be able to remortgage to a higher-LTV mortgage that is still below 100%. Likewise, first-time buyers without someone to act as their guarantor will have to stump up a 5% deposit but will also be able to get much better deals as a result, and they may want to look to the Help to Buy equity loan scheme as a chance to get a lower-LTV mortgage with only a 5% deposit.

For those with family members that are willing to help their loved ones get on the property ladder in any way possible, there’s another option. That savings pot they are happy to put up as collateral may also be used as a gifted deposit to help get a more competitive deal. Some may even use equity release to help their children get together a decent deposit.

There are a few things to watch out for when gifting a deposit, however. It’s vital to follow the correct procedure and be able to show that the help is a gift, not a loan. This will likely require the help of a solicitor, so don’t wait too long to ask for advice and arrange things, or your property purchase might get delayed or even entirely derailed.

For those without generous benefactors, there’s always the Lifetime ISA scheme to consider. This can allow you to save up for that deposit a bit faster thanks to a Government bonus of 25%. They do come with restrictions, though, so remember to read up on them before committing.

What about Joint Borrower Sole Proprietor mortgages?

Joint Borrower Sole Proprietor (JBSP) mortgages are a more recent development that could offer an alternative to guarantor mortgages. Unlike traditional joint mortgages – which would see both parties be on the property deeds as well as the mortgage, which could cause stamp duty difficulties for parents who are already homeowners, for example, and would mean the first-time buyer doesn’t qualify for stamp duty relief – JBSP mortgages allow for several borrowers to be a part of the mortgage for the benefit of a single proprietor who lives in the house.

These mortgages are designed for parents or family members to help someone onto the property ladder without needing to put up their home or savings as collateral. Essentially, they’re not acting as a guarantor, but are part of the borrowing process in their own right, and accept joint responsibility for making mortgage payments.

All parties have their name added to the mortgage and will need to pass affordability assessments as standard, but crucially, they’ll have their income taken into account, which could be particularly beneficial for first-time buyers on a low income – it means they’re more likely to be accepted and could borrow more than they’d otherwise be able to. However, with this kind of mortgage a deposit will still be required, so it’s important to bear this in mind.

Mortgage guides

More guides
guides icon
Repay your mortgage or contribute to your pension? A UK guide

Deciding whether to increase your mortgage payments or pension contribution can have a significant effect on your finances. As a starting point, our preferred independent financial adviser company Kellands encourages consumers to align their mortgage term with their preferred retirement date.

Deciding whether to increase your mortgage payments or pension contribution can have a significant effect on your finances.

Read More
guides icon
Overseas Mortgages Explained

You must get an ‘overseas mortgage’ to purchase a house abroad – normally from a lender in the country you want to purchase in.

You must get an ‘overseas mortgage’ to purchase a house abroad – normally from a lender in the country you want to purchase in.

Read More
guides icon
What are mortgage exit / redemption fees?

This guides outlines what mortgage exit and redemption fees are, and what you need to be aware of to avoid being left out of pocket.

This guides outlines what mortgage exit and redemption fees are, and what you need to be aware of to avoid being left out of pocket.

Read More
guides icon
Tips on finding the best estate agent

Your choice of estate agent can play a crucial part in the process of buying or selling a property. Take your time and make sure that you know exactly what services are being offered. Our helpful guide explains what to look for.

Your choice of estate agent can play a crucial part in the process of buying or selling a property. Our helpful guide explains what to look for.

Read More

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.