Parents as Guarantors

skipgimp

I don't earn enough to get a 'standard' first time morgage for £175K, but could afford the monthly payments on that amount. My parents have a house worth £360K and their combined income would easily cover a mortgage of £175K. They are willing to help me out to get a mortgage, BUT we don't know how. So my question to you guys is, HOW CAN I USE MY PARENTS TO HELP GET ME A MORTGAGE?
Thanks

herbiesjp

What are the actual figures involved?

Purchase price?
Deposit?
Your income?
Do you have any other debts?

What is the income of the highest earning parent? What debts do they have including the mortgage?

skipgimp

thanks for the reply herbiesjp!

The property is £175K
I have no deposit
I owe a student loan of 3K (I'm paying this off monthly)
Income of highest earner parent is £30K
They are mortgage free

Any ideas!!

herbiesjp

Your income?

cupid_s

I think the first step, if your parents can afford it, would be for them to lend you a deposit. If you have a 10% deposit you'll get much better deals.

One thing is that you have to be absolutely 100% certain you can afford the repayments. We got a mortgage based on OHs salary alone as I was a student. Without my student grant there is no way we'd be able to afford the repayments that the bank said hubby could afford on his own and we live so cheaply it sometimes amazes me.

skipgimp

Cheers herbiesjp,

My income is 20K but with 2K bonus a year.

Ian&Kel

I wouldn't stretch that far if I were you. The repayments would almost be your entire wage. And obviously you then have all the other bills and living expenses. I am not sure if the outgoings would outweigh the incoming. Even if not money would be extremely tight and you may get in a fair bit of debt. Like me!!

A monthly repayment on a mortgage of that size is going to be over a grand on a normal 25-30 year plan.

herbiesjp

skipgimp wrote:

Cheers herbiesjp,

My income is 20K but with 2K bonus a year.

You are looking at 3.5 times your joint comes.

However beware the tax implications of your parents owning part of another property. at some point they will come off the mortgage, and they could be liable for some tax charge.

What if they raised a samll mortgage against their property, by way of a deposit for you - would that be another option?

Ice_Queen_112

Hi there

My mum stood guarantor for me on my first mortgage ten years ago, and it was fairly easy to get the mortgage set up. Mine was with the Nationwide and they wanted exactly the same info from my mum that they would have wanted for me - exisiting mortgages, income etc. They then assessed the affordability of the mortgage on her salary and exisiting borrowings, rather than mine. However, the mortgage was in my name only, not a joint mortgage. If I had defaulted my mum would have been solely liable for the payments.

Hope this helps.

Mrs_pbradley936

We provided funds to help our son buy a flat. The solicitor has drawn up a Trust Deed (or maybe it's called a Deed of Trust) anyway place is in son's name not ours.

skipgimp

Sorry - I put my income down wrong. I get 22K with 2K bonus.

So it's possible to get a mortgage (like Ice Queen 112's) in my name but based on my parents income, as long as I can make the payments?

Is there anyway of getting a mortgage based on the cost of my parents house as some sort of guarante?