What is a guarantor mortgage?

A guarantor mortgage lets you borrow more, or buy with a smaller deposit, by having a family member back your mortgage with their own savings or property. The guarantor is not named on the property's title deeds and does not own any share of it. What they are doing is giving the lender extra security in case you cannot keep up your repayments.

Lenders structure this security in one of two ways.

Savings-based security. The guarantor pays a sum, typically somewhere between 5% and 20% of the property's value, into a savings account linked to your mortgage. The money stays there, earning interest, but the guarantor cannot touch it while it is held. If you keep up your repayments, they get it back with interest at the end of the agreed term. If you miss payments, the lender can hold the funds longer or use them to cover the shortfall.

Property-based security. Instead of cash, the lender places a legal charge over the guarantor's own home, usually covering around 20% of what you are borrowing. This carries more risk for the guarantor. If your mortgage is not paid and the lender has to repossess and sell your home, and the sale price does not cover what is owed, the shortfall can be claimed against the guarantor's property.

Family springboard and deposit boost mortgages

A related but distinct option is the family springboard, or deposit boost, mortgage. Barclays' Family Springboard Mortgage is one of the best known versions of this. A family member puts an agreed sum, 10% of the purchase price on Barclays' current product, into a linked savings account rather than personally guaranteeing your repayments. That can let you buy with no deposit of your own, up to a maximum loan size set by the lender, and the mortgage is taken out in your name only.

The family member's money is normally locked away for a set period, three years on Barclays' scheme, before it is released back to them with interest, provided your repayments have stayed on track. If they have not, the lender can hold the funds for longer or use them to cover missed payments. Halifax offers a similarly structured Family Boost mortgage, and terms vary between the two.

The key difference from a full guarantor mortgage is that the helper's money sits in a savings account rather than the helper personally standing behind your repayments. It is a lighter form of commitment, though their money is still at risk if things go wrong, so it should not be treated as risk-free.

How much you could borrow

Some guarantor and family deposit products let you borrow up to 100% of the purchase price, because the family member's savings or property stand in for the deposit you would otherwise need. Your own income, outgoings and credit history are still assessed in the normal way, and your family member's income is not usually added to what you personally can borrow, unlike some other family-assisted routes.

Maximum loan sizes, eligible property types, and how quickly the guarantor's funds or charge can be released all vary between lenders and change over time, so it is worth checking live rates before assuming what a particular product would offer you.

How this differs from a joint borrower sole proprietor mortgage

It is easy to confuse a guarantor or family deposit mortgage with a joint borrower sole proprietor mortgage, but they work differently. With a JBSP mortgage, your family member is added to the mortgage itself. Their income counts towards the affordability assessment and they are jointly liable for the repayments, even though only you go on the property's title deeds. No savings or property need to be pledged as security.

With a guarantor or family deposit mortgage, your helper's income is not normally assessed alongside yours. Instead of joining the mortgage, they put up security, either savings or a charge over their own home, to support your application.

What it means for the person helping you

Whichever version your family member agrees to, it is worth being clear with them about what they are taking on.

With savings-based security, their money is locked away and inaccessible for the agreed term. If repayments are missed, that lock-up can be extended, or the funds used to cover what is owed.

With property-based security, they are putting their own home on the line. In the worst case, if your property is repossessed and sold for less than is owed, the lender can pursue the shortfall against their home.

Standing as a guarantor, or committing savings to a linked account, can also affect a family member's own financial position and future borrowing while the arrangement is in place. Because of this, most lenders require the guarantor to take independent legal advice before the mortgage completes, separate from your own solicitor.

These arrangements are not usually permanent. Depending on the lender and the product, a guarantor can often be released, or a family member's savings returned early, once you have built up enough equity or a strong enough payment history, subject to the lender's own affordability checks at that point.

Who offers these products, and what to check first

Guarantor and family deposit mortgages are a specialist corner of the market rather than something every lender offers. Building societies including Newbury, Loughborough, and Tipton & Coseley have traditionally offered guarantor-style products, while Barclays and Halifax are known for their family springboard and deposit boost schemes respectively. Criteria, maximum loan sizes, which property types are eligible, and how the helper's savings or security are treated all differ from lender to lender.

Because the right product depends so much on your family member's circumstances as well as your own, it is worth getting whole-of-market advice rather than approaching a single lender directly. We can compare guarantor, family deposit, and other specialist mortgage options side by side to find the one that fits your situation.

Is a guarantor or family deposit mortgage right for you?

These products tend to suit buyers who can comfortably afford the ongoing repayments on their own income but have not been able to save a large enough deposit, and who have a family member willing and able to help without becoming a joint owner or co-borrower. They are not the only way family can help you buy. A joint borrower sole proprietor mortgage, a straightforward gifted deposit, or shared ownership may suit your circumstances better, depending on how your family member wants to be involved and what they are comfortable putting at risk.

If you are weighing up your options as a first-time buyer, our first-time buyer guide walks through the whole process, from working out your budget to completing on your first home.

Speak to us to talk through whether a guarantor mortgage, a family deposit scheme, or another route makes the most sense for you and your family. Get in touch and we will compare the whole market for you.