Looking for support or trying to help someone climb the UK property ladder? One route is to step in as a home loan guarantor. This is where you offer your own financial strength so a loved one can secure a mortgage they’d otherwise miss.
The idea sounds generous – and it is – but the fine print also matters here, because you become legally responsible for the debt if the primary borrower defaults. So, we’ve put together a guide to show you how the whole process works!
How Does a Guarantor Loan Differ From a Normal Mortgage?
In a standard mortgage, you borrow money and take the credit-score hits or boosts alone. A guarantor loan, on the other hand, adds a second signature – it’s usually from a friend or family member with a good credit score and steady income.
Lenders run a full credit check on both parties. If the borrower keeps up with loan repayment, everyone’s happy. If the borrower falls behind, the guarantor then has to cover the shortfall – or, in a worst-case scenario, settle the debt in full.
As you can imagine, that’s the kind of obligation that can outlive friendships, so you definitely need to know what you’re getting into if you opt to become someone’s guarantor.
Some of the main reasons lenders invite guarantors are:
- Low Credit Score: First-time buyers or returnees with thin files might struggle to pass the strict affordability test.
- Limited Credit History: Young adults or Brits who’ve spent years abroad have fairly patchy or limited UK data – even if they earned well overseas.
- High Loan-to-Value: A guarantor reassures the bank when the buyer has a small deposit and the loan sits at 90-100% of the purchase price.
According to the Government’s Mortgage Guarantee Scheme, more than 53,000 high-LTV mortgages were completed between April 2021 and December 2024, with an average property value of £211,616.
Nearly 86% of those borrowers were first-timers, which shows you how important security mechanisms like guarantors are when cash deposits are tight.
Who Can Act as a Mortgage Guarantor?
Lenders set slightly different rules, but most want someone aged 21-75 who lives – or at least pays tax – in the UK and shows financial stability through payslips or business accounts.
Some banks will accept a guarantor who already owns property abroad, provided they keep separate bank accounts for UK and overseas funds.
Some of the key traits lenders need to confirm are:
- Good credit history – no missed payments or insolvencies
- Proof of surplus income after personal commitments
- Willingness to obtain independent legal advice before signing
A guarantor can be anyone from a parent or sibling to a long-term partner or close friend. But most lenders still prefer blood relatives, because courts view family guarantees as less likely to involve coercion.
What Does the Guarantor Do for Your Own Finances?
Standing as a financial guarantor locks part of your borrowing power. Mortgage brokers estimate that around 60-70% of your pledged liability counts against your own affordability tests.
So that means that you might find it harder to remortgage your own flat in Edinburgh or to finance a renovation on, say, a coastal house in Portugal. And if things go badly and you must pay arrears, that’s a financial burden that can stretch years, which not only dents your savings but also harms your credit rating.
The Office for National Statistics puts the average UK house price at £270,000 as of July 2025, which is up 2.8% year-on-year. Covering even a few months of payments on a loan that size can sting!
Can Multiple People Guarantee One Mortgage?
Some lenders allow “joint borrower, sole proprietor” structures, where income from two guarantors – say, both parents – helps a child qualify, but the parents avoid the second-home stamp duty surcharge by not appearing on title deeds.
Other lenders cap the arrangement at one mortgage guarantor, so it’s way easier for them to streamline enforcement if they have to. As such, you should always ask how many signatures a given product accepts and whether a future deed-transfer fee applies if you plan to exit the guarantee.
What Happens if the Primary Borrower Defaults?
If the borrower misses a payment, the bank first chases them. And if the arrears grow even more, the lender notifies you in writing. From there:
- You can pay the overdue sum directly, which preserves the borrower’s credit report.
- Fail to pay, and the lender can instruct solicitors and apply late-payment fees. Eventually, they’ll just repossess the property altogether.
- Any shortfall after the sale lands on you, plus legal costs. That liability remains enforceable abroad if the bank wins a UK judgment and seeks recognition in your new country.
So the guarantee is a lot more than just moral support here. It’s a legal promise that follows you, even if you relocate to Spain or the UAE.
Does a Guarantor Loan Help Borrowers With Limited Credit History?
Yes, provided everyone behaves. Timely payments build a good credit history for the borrower, and they usually have the option – once equity rises or income grows – to remortgage without a guarantor.
That way, the guarantor can exit, which frees some of their own borrowing capacity. But on the other hand, missed payments can hurt both parties – lenders file defaults on each credit rating, and removing a negative marker can take six years!
How Do Guarantor Mortgages Compare to Other Routes Up the Property Ladder?
Britain’s high house-price-to-income ratio means you’ve got to be quite creative. So, besides guarantor mortgages, buyers consider:
- Joint Mortgages: Where you pool two incomes with shared ownership.
- Shared Ownership Schemes: This is when you buy 25-75% and pay rent on the rest.
- Lifetime ISAs: Gathering a government bonus toward deposits.
Each of these comes with separate fees and eligibility limits, as you might expect. A guarantor route is handy for graduates who have strong earning potential but pretty slim savings right now.
It also fits emigrating professionals who keep UK ties and trust family to back them, since they know they can step in from abroad if required. On the other hand, it doesn’t suit someone whose own job is unstable.
What Legal Documents Will You Sign?
Expect at least three forms:
- Guarantee and Indemnity Deed: Your binding promise.
- Independent Legal Advice Certificate: Proof that a solicitor explained the financial risks to you.
- Deed of Priority (Sometimes): Sets claim order if there are multiple charges.
Also, solicitor fees can vary quite a bit, so it’s worth budgeting £300-£600 here.
How Upscore Can Help
Upscore’s Finance Passport keeps all your financial obligations in one dashboard. And if you want to move to a foreign country, it lets you use your UK credit score to secure a mortgage overseas!
