Content Writer
Mortgage Advisor & Director
Guarantor mortgages can be a helpful option if you need to borrow more to buy a property than you could afford independently. Here we look at how different lenders calculate affordability on their guarantor products, and how to work out how much you might be able to afford with a supported mortgage application.
Can you borrow more on a mortgage with a guarantor?
You can often borrow more with a guarantor mortgage than you’d be able to borrow alone, although it depends on the specific product and how lenders calculate affordability.
In some cases lenders will require applicants to be able to afford the mortgage repayments independently, but a guarantor either provides security in lieu of a deposit, or because the applicants have poor credit. In this case you wouldn’t typically be able to borrow more, as your loan would be based purely on your own affordability. Under these circumstances, the guarantor typically provides a set amount of their savings, or an asset, such as their property, in support of the application.
However, some lenders allow guarantors to support the affordability of the repayments, and in this case, they may base the loan purely on the guarantor’s affordability, or on the combined affordability of the guarantor and the applicant(s). This is more typical in the case of a JBSP mortgage (joint borrower sole proprietor), but there may be some lenders willing to consider this type of guarantor support on other products.
Where this is the case, the guarantor will typically need to have an income, as the loan is more likely to be based on their regular income than their savings or assets. However, some lenders may also accept a combination of income and assets as a mortgage guarantee.
It depends on whether you need a guarantor due to low income, low deposit, or they are being used to reduce risk, such as when the applicant has poor credit or minimal work history. This is why it can be helpful to speak to a broker, like us, to ensure you approach the right type of guarantor product for your needs.
How affordability is calculated for guarantor mortgages
Each lender calculates affordability differently, depending on the type and purpose of the guarantor mortgage. It may be that they base the loan purely on your own income, or they may be willing to consider both your income, and the guarantor’s income.
The multiple of the applicants and guarantor’s income that lenders may consider will vary based on their own criteria, and the LTV of the borrowing. For example, some lenders may consider 4.5 times the income of applicant(s) and guarantor(s), whereas others may have a different income multiple for the guarantor than the applicant.
In some cases, lenders may even base the loan purely on the guarantor’s income. This would typically be if the applicant’s only form of income was non-guaranteed, such as benefits only.
However, no matter which income the lender bases the mortgage loan on, they will need to assess the affordability and creditworthiness of both the applicant(s) and the guarantor(s).
Guarantor mortgage calculator
This calculator should help you to calculate how much you might be able to borrow with the support of a guarantor. However, keep in mind that this is not based on the criteria of any specific lender, so is purely for guidance.
To find out exactly how much you could borrow with a guarantor mortgage, you’d need to compare the maximum LTV and income multiple offered by each lender. We can help you to do this quickly and effectively. Use our guarantor mortgage calculator below to get a rough idea of of your affordability:
Now that you have run some calculations, your next step is to compare the mortgage deals available. Our mortgage brokers can do this for you and offer bespoke advice on which one to choose - get started here.
How individual lenders calculate guarantor mortgages
Here are some examples of how lenders offering guarantor mortgages may calculate your loan. Please note that lender criteria is subject to change and may vary based on your individual circumstances:
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Barclays: Family Springboard Mortgage allows you to borrow 100% of the cost of a property, as no deposit is required where a guarantor supports the mortgage. However, applicants will need to meet the full repayment affordability with their own income
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Nationwide: Guarantor mortgages allow you to borrow up to 85% LTV with a guarantor, however, you would need to meet affordability for the full loan repayments independently
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Loughborough Building Society: Offers a range of family-assisted mortgages, including a JBSP, which allows up to 2 guarantors' income to be considered. Each will need to be able to cover at least 25% of the loan with their personal income
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Skipton: Income booster requires you to have at least 5% deposit, but they will consider the income of up to 4 people, so this could be 2 applicants and 2 guarantors, or another combination of 4 borrowers
What to do after running your calculations
Once you’ve got an idea of how much you might be able to borrow by using our calculator above, it’s time to get in touch and speak to our guarantor mortgage experts.
At Teito we can advise applicants and guarantors about the best product type for their needs and circumstances. No matter what type of help you need with your mortgage, we’ll compare deals from across the whole market to find the most suitable guarantor mortgage for you.
If you’re ready to take advantage of a free, no-obligation chat with a broker who specialises in guarantor mortgages, get started here.
FAQs
Yes, some lenders will allow guarantors to support 100% mortgage applications. This would usually involve your guarantor using a set amount of their savings, or hold on one of their assets to cover the equivalent of a 10-20% deposit on your property.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
