In the depth of the housing recession in 1993, we guaranteed a mortgage for DD. The flat was in south London, it had two bedrooms, one to be let to pay the mortage. It cost £32,000, very little even then, and we had £30,000 in available savings.
The key factors were: that letting one bedroom would bring in an income, nearly equal to the mortgage payment, and we had enough savings to pay off the mortgage if she defaulted for any reason. We would not need to remortgage our house or meet the default payments from income.
As I understand it jaffacake2 your situation could leave you faced with doing one or the other. so do not do it.
You have made a very generous alternative offer to house your daughter and her children. Do not let your daughter emotional blackmail you, bully you or harrass you in to doing something, which I think you know, in your heart of hearts, could ruin your relationship with your daughter for ever and bankrupt you.