Question
My boyfriend and I are keen to get out of the rent trap and onto the property ladder. Unfortunately, neither of our parents can provide us with any financial assistance in the form of a lump sum. However, they both have good jobs, a reliable income, and some savings that they would like to keep for their future.
So, we wondered if they could “guarantee” the mortgage for us? Will any lenders agree to this?
Our combined savings are currently around £6,000 and we are trying our best to build this up, but our rent has recently been raised so it has been difficult. I earn £32,000 and my friend is self-employed but last year he earned almost £32,000. 40 thousand pounds sterling.
Darren’s answer
There are lenders that allow family to “guarantee” the mortgage, even if your parents cannot provide you with the funds.
It’s important to note that many lenders have different ways of doing this and have different terms to describe it.
I will go over a couple of the main options with you in basic terms and advise you to work with a broker who can discuss these options in more detail, depending on your individual circumstances.
Traditional “open-ended guarantor” mortgages (where the parents are responsible for the entire mortgage indefinitely) are now rare.
Instead, most UK lenders offer more structured home loans to help the family. They are widely used by first-time buyers who struggle with deposits or affordability.
Two main options are…
1. Savings/family backed mortgages
Where your parents place their savings (usually 10% to 20% of the property price) in a locked savings account with a lender. The funds are still earning interest but are not accessible in this account.
2. Joint Borrower, Sole Proprietor (JBSP)
This is where one or both parents are named on the mortgage, and their income is added to yours. Their names are not mentioned on the property deeds but on the mortgage loan. This boosts the amount you can borrow, which helps if affordability is limited. Please note that parents are legally responsible for payment if you are unable to pay.
What you need to know
Lenders will check and evaluate certain criteria for your parents which may vary depending on the type of ‘guarantee’ they offer, such as:
-
- Income and affordability
- Credit history
- Age (must usually be under 70-75 years old by the end of the mortgage)
- Property/property rights if property or savings are involved
- Independent legal advice (almost always required)
The good news is that as brokers, we are used to supporting clients in your situation and there are options available.
Many lenders offer specific products or incentives to help first-time buyers such as the above.
I would like to speak to a whole market mortgage broker who can review the criteria for all lenders, in line with your specific circumstances, and guide you through the process.
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