Parent Guarantor Mortgage

Can a parent and child get a guarantor mortgage with a gifted deposit? Do you need a deposit for a guarantor mortgage?

Yes, it’s feasible for a guarantor mortgage to have the deposit funded as a family gift. It’s also feasible to raise a 100% mortgage on a guarantor basis.

At the time we’re recording in June 2025, there are about 10 lenders in the market who will potentially do a 100% mortgage on a guarantor basis. But, of course, this is subject to change.

What power does a parent guarantor have?

The guarantor doesn’t own the property or have any control over the borrower’s actions regarding the loan.

The parents and the borrower are jointly liable for the loan, so the lender can pursue either or both for repayment. When a parent agrees to be a guarantor, they sign a legal agreement stating they will be financially responsible for repaying the loan if the borrower can’t.

So, the guarantor has responsibilities for the conduct of the loan, but no ownership rights over the property.

If a parent is a guarantor on a mortgage, how long are they liable?

It’s until the lender releases the guarantee, and they won’t necessarily do that without being asked to. But a guarantor won’t necessarily have to stay on the mortgage for the whole term.

For instance, the applicants who own the property may find their financial circumstances improve, or they reach a sufficient level of equity in the property. They can then request that the lender release the guarantor.

Do parents need to already own their property to be a guarantor?

Not everyone can act as a mortgage guarantor, and some lenders do insist that mortgage guarantors must have fully paid off their own mortgage. Others may settle for a certain amount of equity within that property.

Again, it comes down to lender criteria. The parents’ property doesn’t necessarily need to be unencumbered, but it must have sufficient equity.

If a large amount of the mortgage has been repaid and there is 50% equity in it, that may be acceptable to one lender, but not to another.

If guarantors are still paying off a mortgage, they will need to prove that they have sufficient income for both their own mortgage repayments plus the new guarantor mortgage. If guarantors are retired and no longer have a regular income, they may have to prove they have funds in place to cover the payments if necessary.

Essentially, the lender is always checking that the guarantor has sufficient resources to pay the new mortgage if the applicants can’t – whether that’s via an unencumbered property or income.

How can a broker help with a guarantor mortgage?

A broker is there to help anyone who’s looking to buy a house find solutions. There’s no fixed answer to everything. It is really a case of analysing the situation, finding out what can be used as security for lenders, understanding what the applicants can afford, and then finding a lender that will allow them to borrow what they need.

If you were to set out on this journey on your own, it could be quite a torturous and difficult one. A broker will listen, find out what the lenders need to know, and then find the right solution.

If the right mortgage isn’t available straight away, it’s about giving good quality advice around how to get there. It’s a journey, sometimes, and we’re here to help people along the way.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.