Guarantor Mortgages

Help your child, grandchild or dependent secure their first home with a Guarantor Mortgage in Scotland.

This specialised mortgage may be suitable for first-time buyers or students living in Scotland with a maximum LTV of 90% and includes no second home tax for parents.

If you're a prospective first-time buyer struggling to save for a deposit or to meet the necessary mortgage requirements for a standard residential mortgage , this product could be perfect for you.

Read on to find out more, or give us a call directly on 01738 583008 to get help with buying your first home!

Guarantor mortgages

What is a guarantor mortgage Scotland?

A guarantor is a person not living at the address who takes on joint responsibility for home loans. 

It is common for landlords to require guarantor details from students and young people in the rental market. Doing so gives the landlord security in case the tenant is unable to pay rent as someone will be legally obliged to step in for them. This is often a parent, guardian or older relative.

Similarly, some lenders offer a specialised guarantor mortgage for those looking to buy a property. The guarantor will be required to offer their savings or property as collateral against the loan and be liable for the mortgage repayments should the borrower not meet them.

This guarantor mortgage arrangement in Scotland can help people get on the property ladder and allow them to potentially borrow more than they would be accepted for alone. If the homeowner keeps up with the mortgage payments, the guarantor will not be required to do or pay anything.

However, the guarantor must be prepared to take on the financial burden should something go wrong.

Who are guarantor mortgages suitable for? 

Guarantor mortgages in Scotland can be a blessing for those who might struggle to buy a home by themselves. They are particularly helpful for young people and first-time buyers.

This mortgage might suit you if:

  • You have a low income
  • You are struggling to save for a deposit
  • You have bad credit
  • You have little or no credit history.

Mortgage lenders will determine how much they're willing to lend you based on your income. This can be a real barrier for those who are just starting out in their careers, are self-employed, or are in lower-paying jobs. Guarantors allow you to be considered for a bigger loan and, therefore, a more substantial/suitable property.

Saving for a deposit can also be one of the biggest obstacles facing prospective homeowners, particularly first time buyers. With this mortgage, you might not be required to pay a deposit in all cases. However, it will help you get a better deal should you be able to provide one. You will also still need to have enough money for payments of any legal fees or stamp duty.

If you are young or new to the country, you may have never taken out a credit card before and have little credit history. This would count against you if you were to apply for a regular mortgage, as credit rating evaluation is an integral part of the application process. With a guarantor mortgage, lenders will consider your guarantor's credit score in place of yours, making you a more attractive potential borrower.

The best way to determine whether a guarantor mortgage Scotland is right for you is to get in touch with an independent mortgage advisor, such as The Lending Channel . We provide independent, no-obligation, in-depth mortgage advice based on your specific circumstances to ensure you get the financial product and help that is best suited to you.

Call us today on 01738 583008 to get started.


Who can be a mortgage guarantor in Scotland? 

A mortgage guarantor is typically a close family member or friend. Many borrowers ask older relatives, such as grandparents, to be their guarantors because they typically have a more robust financial track record. Some lenders explicitly require the guarantor to be a family member, as familial relationships are regarded as stronger and more trustworthy than friendships.

An eligible guarantor will typically need:

  • Savings.
  • Property - sometimes, a guarantor will be required to have paid their mortgage off in full. Otherwise, the lender might accept a certain amount of equity in it. 
  • A high income - you will have to provide proof that you have the means to cover the mortgages should you need to. If the guarantor is retired, they'll have to prove that they have enough money and savings to cover both their costs and the homeowner's loan.
  • A good credit history - this is so the lender can see how you manage your money and be confident that you are reliable financially.
  • To have received legal advice, a prerequisite for some lenders; they want to know you understand the risks of taking on guarantorship. This is advisable in any case, so if you are considering this pathway, always seek advice so you know what you're agreeing to.

Do guarantors get credit checked? 

Yes, guarantors will be checked for a guarantor mortgage application in Scotland; however, the lender will do what is called a 'soft check', and it will not show up on your report or affect your score.

Lenders do this to get the measure of your financial situation and gauge whether or not you're considered reliable.

How does a guarantor mortgage work in Scotland?

A guarantor mortgage in Scotland is really designed to make the market more accessible and is popular with young first-time buyers. After repayment begins, should the homeowner keep up their payments, it works like a regular mortgage. The borrower's name will be on the property's title deeds, and the guarantor won't own any share of it.

The most significant difference is the prior measures that are implemented by the lender to secure this loan. The lender might take a portion of savings from the guarantor as security or take legal charge of a part of the guarantor's property. This provides peace of mind for the lender, as they know that they will be able to claim what they are owed in the absolute worst-case scenario.

Guarantor liability if you can't pay your mortgage 

It is generally very rare for a situation to arise where both the homeowner and the guarantor cannot offer repayment. This is because the vetting process for a guarantor mortgage is exhaustive, and many lenders will only accept those they feel are very reliable.

However, if the situation changes, there can be severe repercussions to breaking the repayment contract. The lender is at liberty to forcibly sell your property, and it will fall on the guarantor's shoulders should this repossession fail to cover your costs. The lender can claim any outstanding balance from the property supplied by the guarantor. Therefore, should the worst happen, both the homeowner's and the guarantor's homes will be at risk. If the guarantor has offered up their savings, the lender will claim their money from there.

Because of this risk, it's a good idea to remortgage your home when you can. Once you've built up enough equity, you will be able to acquire a deal that doesn't require a guarantor at all.

Nevertheless, this mortgage offers a great opportunity for those who might struggle to be accepted by a lender otherwise. Call The Lending Channel today , and we'll use our years of experience to advise you on the process.

Does the new mortgage guarantee scheme work the same as a guarantor mortgage?

No. Although they sound similar, the mortgage guarantee scheme was launched by the UK government to make house ownership more accessible for young people.

The scheme is quite similar to the Help to Buy mortgage guarantee scheme, which ran from 2013 to 2016. The aim of the scheme is to open up more options for low-deposit mortgages, totalling at 10% or less. It encourages participating lenders to reintroduce 95% LTV mortgages to the property market.

To qualify, you must be a first-time buyer and be seeking a residential repayment mortgage as an individual, not a business. If you think you might be eligible for the mortgage guarantee scheme, it's always best to talk through your options with a qualified mortgage broker. Give us a call, and we can advise you further on the right guarantor mortgage for you.

Some other alternatives to a guarantor mortgage include:

Help-to-Buy equity loan scheme

This scheme is for first-time buyers looking to get a residential mortgage. By applying through this scheme with a 5% deposit, your equity will increase to 25%, which could mean a better deal for your loan. Consult The Lending Channel to determine whether increasing equity with an additional loan is worth it for your circumstances and budget.

95% LTV mortgages out with the mortgage guarantee scheme

It's possible to find a mortgage lender who offers 95% LTV mortgages outside of the scheme, although you'll often need to liaise directly with the lender through an established broker.

Get help with Guarantor Mortgages Scotland

Applying for a first time buyer mortgage can be a daunting and scary experience. Not only do you have to have the necessary funds, deposit and credit stats in place, but you need to ensure all your paperwork is completed to the standard needed. 

However, with a Guarantor Mortgage, propsective homeowners in Scotland can get help purchasing their first property. This type of mortgage is ideal for younger people in their early-mid twentires looking to buy their first home but unable to meet the deposit or other financial requirements. 

To find out more about how Guarantor Mortgages work in Scotland, or to get bespoke financial advice tailored to your situation, contact The Lending Channel today. We'll be more than happy to help, and together we can get you on the property market and into your very first home. 

We are a credit broker, not a lender and are paid a commission by our lenders, full details of this along with our fees will be detailed in the Terms of Business we issue to you.

The Lending Channel ltd is a member of the National Association of Commercial Finance Brokers (NACFB).

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