Parents as Guarantor

angelofabundance

My friend has a son, he can probably get a mortgage of about £60,000 and wants to borrow about £100,000. He has calculated he can afford this.
Can his mum stand guarantor for the additional £40,000 or is the only way to do this to take out a joint mortgage making them both liable.
He would really like it to be in his name only.
Is there a product out there that would suit?

Thanking you all in advance for your knowledge!

craigb_3

what does the chap do for a living.?

craigb_3

apologies. I mean the son.

angelofabundance

He delivers for Waitrose, although looking for something else at the moment. Brings home about £250 per week, he has a girlfriend (a nurse) but is not sure he's ready to join forces financially with anyone yet.

craigb_3

Most lenders will only do a guarantor for someone who is capable of taking on the debt themselves in the future (a trainee accountant, doctor etc). my lending book tells me "a guarantor is not a method for someone who cannot afford a mortgage to obtain one". If his job was different the answer would have been "yes" they can do that and only guarantor part of the debt.
check with a broker that wont charge you a fee for sourcing a mortgage. A big broker who uses the same lender over and over again will have someone there who can possibly pass the case. A branch might struggle. Ask each lender direct the question "do you accept some who is guarantor for son who is employed as xyz." you will narrow it down very quickly.

green1970

craigb wrote:

Most lenders will only do a guarantor for someone who is capable of taking on the debt themselves in the future (a trainee accountant, doctor etc). my lending book tells me "a guarantor is not a method for someone who cannot afford a mortgage to obtain one". If his job was different the answer would have been "yes" they can do that and only guarantor part of the debt.
check with a broker that wont charge you a fee for sourcing a mortgage. A big broker who uses the same lender over and over again will have someone there who can possibly pass the case. A branch might struggle. Ask each lender direct the question "do you accept some who is guarantor for son who is employed as xyz." you will narrow it down very quickly.

Are you advocating going to see a broker who doesn't charge a fee to source, only to use his/her expertise and then use whichever lender he/she comes up with and go to them direct - if so, I think that's pretty awful. Fair enough, go to a broker who perhaps only charges a reasonable fee on completion as this is the only way these sorts of experts will survive.

In answer to the original poster's question, there are some good lenders out there who will consider guarantors as long as they are earning and not too close to retirement. As has been said before, lenders only want to do this if they feel that the borrower has the chance to support the loan on their own as per their normal criteria within a few years.

Coventry Building Society have a scheme known as 'Step Up" where this can be done, Royal Bank of Scotland normally only do this for students with their parents and Bank of Ireland have a specific "First Start" plan where this thing is encouraged. Other than that, Nationwide work on affordability rather than income multiples and Northern Rock have increased income multiples if you use a broker and go for a long term fixed rate and you get a good credit score. Also, Cheltenham & Gloucester local managers often have decision powers and will consider guarantors. Other than that, the parents own bank might be the first port of call along with smaller local building societies who don't have such rigid criteria with regard to guarantors.

Good luck!

Jo

craigb_3

Green1970 are you on this planet. If you read my message again you will see that I mentioned how a broker can pass a mortgage when a branch cant. (as they put through maybe 10 mortgages a month and have more power than mr joe bloggs). Why pay a broker a fee if you can get a broker who takes a proc fee for the service? doesnt make sense does it.

angelofabundance

Thank you for all this information I will pass this on to my friend.