Guarantor Mortgages

For people who need a helping hand to get on the property ladder

Why choose a Guarantor Mortgage?

Our flexible underwriting means we’ll consider your individual circumstances

You can talk to our Mortgage Advisers in branch or over the phone for help and advice throughout your application

2021 Building Society of the Year at the Scottish Mortgage Awards 

 

Here's what you need to know

A Guarantor Mortgage is designed to help young first time buyers who may not have sufficient income in their own right to get a mortgage in their name (including students) and need the help of a parent or parents acting as guarantor(s).

Why choose a Guarantor Mortgage?

Our flexible underwriting means we’ll consider your individual circumstances

You can talk to our Mortgage Advisers in branch or over the phone for help and advice throughout your application

2021 Building Society of the Year at the Scottish Mortgage Awards 

 

Here's what you need to know

A Guarantor Mortgage is designed to help young first time buyers who may not have sufficient income in their own right to get a mortgage in their name (including students) and need the help of a parent or parents acting as guarantor(s).

Why choose a Guarantor Mortgage?

Our flexible underwriting means we’ll consider your individual circumstances

You can talk to our Mortgage Advisers in branch or over the phone for help and advice throughout your application

2021 Building Society of the Year at the Scottish Mortgage Awards 

 

Here's what you need to know

A Guarantor Mortgage is designed to help young first time buyers who may not have sufficient income in their own right to get a mortgage in their name (including students) and need the help of a parent or parents acting as guarantor(s).

Term

To apply you need to be at least 18 years old on application and normally not more than 85 at end of mortgage term.


Minimum mortgage term is 5 years and maximum term is 40 years.
The guarantor should not be older than 65 at the time of application and no more than 75 at the end of the mortgage term. They need able to provide confirmation of a sustainable income stream into retirement (if appropriate).

Income

Parental Support

We’ll need a Letter of Support from the parent(s) making the monthly contribution to mortgage payments. This may also include contribution to day to day living expenses where the borrower has little or no income.

The annual income of the main earner for the parent(s) giving support must be at least £40,000, and must be sufficient to cover the support plus any existing mortgage or finance commitments they have in their own name. Any existing financial commitments of both the applicant and the parent(s) will be taken into consideration when affordability is calculated.

Repayment Options

  • Capital and Interest
  • Interest only – available up to 75% of the property value or purchase price (whichever is lower) subject to the maximum loan size of £300,000. When you apply, we’ll need confirmation that plans are in place in the name of the borrower to pay off the mortgage at the end of the term and we’ll ask you about your plans occasionally throughout the mortgage term. Examples of these plans are normally endowment policies; stocks and shares ISAs; pension lump sums; and second/investment properties.
Loan Amount and Loan to Value

Minimum loan size is £50,000 and the maximum is £300,000. We can lend up to 90% of the purchase price or property valuation (whichever is lower).

Property

Guarantor Mortgages are available for owner occupied residential properties. All mortgages are subject to a suitable property valuation.

For property purchases in Scotland, we can normally use the property valuation contained in the sellers' Home Report provided that it’s no more than 3 months old. Speak to our please speak with our Mortgage Advisers for more details.

Security

Security for any mortgage granted will be as follows:

  1. A Standard Security (Scotland) / First Legal Charge (England) will be taken over the property being purchased as security for the mortgage borrowing.
  2. Parental Guarantee from the parent(s) acting as guarantor for borrowing. Please note the guarantee could be for a limited amount or to cover the full mortgage.
  3. Parental Letter of Support for monthly payments – required to support any borrowing above normal affordability on the applicants own income.

It’s a requirement that the guarantor takes independent legal advice to ensure they fully understand the legal obligation of providing a guarantee.

Early Repayment Charges

If overpayments of 10% or more of the loan amount are made in any 12 month rolling period during the initial period, and depending on which mortgage your customer has, the following charges will apply:

  • For our 3-year mortgage, the charge will be equivalent to 3% of the outstanding balance amount in year 1 and 2 and 2% in year 3.
  • For our 5-year mortgage, the charge will be:

o 5% of the outstanding balance in the 1st year

o 4% of the outstanding balance in the 2nd year

o 3% of the outstanding balance in years 3 & 4

o 2% of the outstanding balance in year 5

After the initial period, the Society will not make an early repayment charge if the mortgage is on Standard Variable Rate and is repaid. However, there will be certain redemption fees that will need to be paid (see our Details of Charges leaflet for more information).

Where Early Repayment Charges apply to any of our mortgages, we may allow overpayments (normally up to 10% of the outstanding balance in any rolling 12 month period) without penalty.

Once any period where Early Repayment Charges are applicable has ended, capital reductions can be made without limit or penalty to reduce the balance of the mortgage.

Insurance

We’ll need evidence that buildings insurance for the property is in place before we can release funds. 

What happens if I want to move house?

 

If you move home and want to transfer this mortgage to a new property, you can do this if the application satisfies our normal lending criteria.

 

What you’ll need for your application

 

We’ll allocate a qualified mortgage adviser to take you through the whole process. They’ll be able to advise which product best suits your requirements by the information you give them. You can have a face-to-face or telephone meeting/appointment – whatever works best for you.

We’ll need proof of ID - this can include a passport or a driving licence.

We’ll ask you for 3 months recent payslips and bank statements to confirm your income as your income and outgoings will help us determine how much you can borrow. You’ll need to think about the impact any future rise in interest rates would have on your finances.

We’ll also need information about the property you want to buy, including valuation details or Home Report, and how much your deposit will be.

We’ll need your consent to check your personal financial data to help us assess your mortgage application so we can complete it as efficiently as possible.

 

What happens after I’ve applied for a mortgage?

 

The next step is for us to make you a mortgage offer. Before we can do this, we’ll need a valuation of the property you want to buy. Most homes for sale need the seller to produce a Home Report, which is given to prospective buyers. This contains a survey report featuring information on the condition and valuation of the property. If there’s no Home Report, we’ll instruct an approved valuer to carry out a Lender’s Valuation. We’ll need to charge for this.

Conclusion of Missives and settlement is the final stage. This means that the buyer and seller are both committed to the sale. Your solicitor will keep in touch with you throughout the whole process.


Your solicitor will request the mortgage funds from us before transferring to the seller’s solicitor.  When the solicitor has paid the agreed price and has received the required legal documents, it’s all done and you can move in to your new home.

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