A guarantor mortgage is a type of mortgage in which a third party, known as a guarantor, agrees to be responsible for the mortgage payments if the borrower is unable to make them. Guarantor mortgages are often used by borrowers who may not have a sufficient credit history or income to qualify for a mortgage on their own, or who may have a less-than-perfect credit score.
In a guarantor mortgage, the guarantor is typically a parent, relative, or close friend of the borrower, and is required to provide a guarantee for the mortgage. This may involve providing collateral, such as a second property, or agreeing to make the mortgage payments if the borrower is unable to do so.
Guarantor mortgages can be a useful option for first time buyers who may not qualify for a traditional mortgage, but they come with additional risks and responsibilities for the guarantor. It is important for both the borrower and the guarantor to understand the terms and conditions of the mortgage, and the potential consequences of defaulting on the loan.
The guarantor has to agree to be part of the mortgage arrangement and therefore becomes jointly liable for repayment of the mortgage. In the event of the primary borrowers not being able to afford the repayments the guarantor has to take their place.
