Guarantor Mortgage - how does it work?

maffp

Hi!

Myself and my wife are looking at getting a mortgage for a £100k property. We have £25k deposit to put down. The problem is we are both self-employed and young so pretty much no financial hostory at our disposal. I am now a director of the family company but there are no accounts to suggest this until next year.

My father has offered to guarantor it. What does this mean in terms of application then? Is it basically my dad who applies for the mortgage in our names and we pay for it? Or do we apply and just provide my Dad's financial details?

Cheers!

opinions4u

You apply for the mortgage.

Dad applies to be guarantor.

The lender decides if they are happy or not. Typically, they will underwrite Dad as if he was the sole applicant. Can he afford the payments? Will the debt be repaid before he retires etc.

If you don't make payments, Dad has to pick up the bill.

maffp

Cool. I wounld imagine it shouldn't be a problem... but who knows. He's fully paind on a £160k house. Owns business premises and in main director (+myself and brother) on £250k turnover business.

Senior_Paper_Monitor

There are a number of different guarantor structures (varies between lender) - selecting the best one to match both parties' circumstances is the skill.

If you are a director this will reflect at Companies House far earlier than waiting for the next year's accounts (but frankly its not an important issue to prove).

Turnover is not the important figure - declared/retained profits, salaries or dividends paid (for both of you) is what will matter.