The biggest lenders may have pulled out of the guarantor mortgage market, but they are still available through some of the smaller building societies.
Virgin Money was the last lender to stop offering guarantor mortgages, leaving lenders like Cambridge Building Society, Chorley Building Society, Dudley Building Society and Leeds Building Society with options.
Guarantor mortgages come in more forms than they used to and play an important part in helping younger borrowers to get on the property ladder. The lenders have been busy coming launching Joint Borrower Sole Proprietor mortgages as an alternative to guarantor mortgages. They enable parents to use their income to boost the application as their name will be on the mortgage but not on the title deeds.
Other lenders allow parents to use the equity in their property as security, so they do not have to hand over their savings. These often involve having a second charge on their property as security for 20% of the mortgage.
Linked saving accounts are also used to deposit funds to guarantee the mortgage, and parents get their money back after three years providing the accounts mortgage is managed correctly. They also receive interest.
Cheap mortgage rates
Mortgage rates for first-time buyers have improved quite dramatically over the last year, and the lenders are offering more low deposit deals. If you have a 5 per cent or 10 per cent deposit, you have a wide choice of rates providing the affordability calculations stack up.
Aaron Strutt, product director at Trinity Financial, says: “If you go to your bank and ask for a guarantor mortgage you may well be told that they are not available. Many of the lenders have ditched them in favour of Joint Borrower Sole Proprietor deals.”
Call Trinity Financial to secure a guarantor mortgage on 020 7016 0790