Guarantor Mortgage

haziec

Does anyone know who does guarantor mortgages?
With a max 10% deposit.
Or is it best for a parent to be one of the people on the mortgage agreement.
Our daughter and her husband fall short of the salary multiples on a property they want to. We are willing to help but don't really know how to go about getting some information.
I did speak to Charcoal who said Bristol and West but they no longer do guarantor mortgages.
thank you

herbiesjp

It will all depend on your individual circumstances

Not all lender offer the same multiples, so just because one lender does not offer the needed amount does not mean all lenders work in the same way.

You may want a second opinion from another broker, and then if they cannot find a deal, at that point look at guarantor mortgages.

haziec

Thank you, they need about 5.5 x income, which we just can't find.
There is so many websites with broker info and its difficult to find some advice and information about what is available.

herbiesjp

5.5 times is definitely on the high side.

Do they have any other debts? Clean credit histroy?

A guarantor mortgage may be an option, so your best bet would be to discuss in detail with an adviser, especially at it would impact on you as well, being the guarantor.

If you do act as guarantor, then you may want to have your portion of the house down as 1% and other owning 99% in order to minimise any IHT liability that could potentially arise as well

haziec

herbiesjp wrote: »

5.5 times is definitely on the high side.

Do they have any other debts? Clean credit histroy?

A guarantor mortgage may be an option, so your best bet would be to discuss in detail with an adviser, especially at it would impact on you as well, being the guarantor.

If you do act as guarantor, then you may want to have your portion of the house down as 1% and other owning 99% in order to minimise any IHT liability that could potentially arise as well

no debts, clean credit history, we own our house outright having finished our mortgage some time ago. Thats a good suggestion about the 1/99% split. Thank you:T

herbiesjp

ALternatively you can raise a deposit from your property, and gift across to them if you want and thereby not need the guarantor mortgage either.

A lot tidier, and you would get great deals witha low LTV and should be able to pick up free legals and free valuation as well (maybe no arrangement also)

haziec

herbiesjp wrote: »

ALternatively you can raise a deposit from your property, and gift across to them if you want and thereby not need the guarantor mortgage either.

A lot tidier, and you would get great deals witha low LTV and should be able to pick up free legals and free valuation as well (maybe no arrangement also)

Thanks - excellent advice but prob. not possible. Its something to think about but the other problem is that we have four children, so to do this for one would be very unfair to the others. The younger two are still at home but the eldest is married, they both cannot handle money and are in debt and we certainly wouldnt want to bail them out again (don't get me wrong have helped them in the past!)

trebor21

Is the 5.5 multiple of their joint income or individually?

haziec

trebor21 wrote: »

Is the 5.5 multiple of their joint income or individually?

its joint.

Its looking very unaffordable IMO even if we guarantee it.

Trying_to_be_good

Haziec

That you want to help is great, but you don't want to help them into unaffordable levels of debt - as you say "Its looking very unaffordable IMO even if we guarantee it" - the salary mulitples exist for a reason, and they need to be sure they can afford the payments now and in the future. If you're the guarantor, you could obviously be left with the payments to make if it all went wrong.

trebor21

I think the banks would be very unwilling to lend this amount even with you as gurantour.

Obviously i dont know all the details, but even if they approved this, i think it would be pushing their financial limits. You could end up bailing them out in the future!

I think they should perhaps aiming for something around 3x joined incomes!