Guarantor Mortgage advice please

leeroyh

Hi
Quick facts:
Inherited half my late mothers house (currently living there) but need to buy my brother out. Need £80k for £160k house.
Self employed and been accounting with tax in mind rather than mortgage! Can prove contracts for over £24k this year but last 2 years not so good (fairly new business), with letter of intent for one contract saying £20k+pa with no reason why this should not continue in the future as have been booking me for past 3 yrs (and contract has grown each year).
Think I have just been ripped of by a broker who informs me Santander have turned me down(after paying him) on grounds that not enough reliable income, but doesn't have any paperwork to back that up as yet.
My brother has offered to stand as guarantor but I don't know if this will help or, in fact anything about these mortgages.
Sorry if this is a bit vague but any help/advice would be really appreciated.
Thanks in advance

holly_hobby

Your brothers income will need to cover his own os commitments & the loan he will stand guarantor for.

LTVs can be restrictive for this type of borrowing

The lender will want to see evidence that your income is due to increase in the forcoming yrs - with a view to release the guarantor

He can only be released in the future, if, as or when your income is sufficient to service the loan

Your brother will also be legally liable for the debt if you default on the borrowings

Your brother should seek legal advice to ensure he understands all the complexities of becoming a guarantor (indeed the lender may insist upon this)

Hope this helps

Holly

ACG

You say your self emplyed - is that as a sole trader or a ltd company?

If a sole trader - the profits of the company will be taken into account.
If a ltd company - the wage you took will be taken into account.

There are lenders out there, that will lend to companies with fluctuating or even decreasing profits. I had a meeting with a BDM from a mortgage company a week or 2 back - they had no issue with this. Go and find yourself a decent broker who knows what they are doing, it may be impossible but they should be looking at more than just Santander before saying there is nothing that can be done.

leeroyh

Thank you Holly/ACG

I am a sole trader and the business is really taking off fortunately.

My brother is aware of what is involved as he was a financial advisor for many years, he would also have the means to service the agreement.

I have my doubts that the broker I have seen has even approached Santander!

I appreciate you both taking the time to advise as I really have no clue.

ACG

The very basic way to look at this is lenders will lend you upto 4x your income.

Your income would be the PROFITS of the company and not the turnover. It doesnt matter what contracts you have, its all about the profit. If your looking for an £80k mortgage, then your company needs to be earning £20k a year.

Those figures are VERY basic and there is a lot more to it than that but if you had a wage of £20k last year, there are copanies who will probably be able to help.