Guarantor Mortgage/Wait 3 Months

ncfcstar

Hi guys,

You may have seen a previous post from a week or so ago about my situation regarding mortgages. Basically my girlfriend has a teaching job lined up for September but as she is a student at the moment, we can't get a mortgage without a 20% deposit until June. Even then the mortgage offer that we could consider would have expired prior to when we want to move July/August.

We have found a property we love, a new build due for completion at the end of July and it fits our timescale perfectly. Obviously we can't reserve it at the moment as no mortgage is in place. So my question is if we have my girlfriends father act as a guarantor on the mortgage will this mean a mortgage can be arranged sooner, and are the rates worse than if we waited 3 months? Can a guarantor be removed after a period of time? Or could a rise in our deposit to the 20% with the build time of the new house taken into account extend the mortgage offer nullifying the need for a guarantor?

Or basically should we just wait until June when we could get a mortgage on our own?

Any help would be really appreciated.

Thanks in advance.

Thrugelmir

Guarantor mortgages are few and far between. Also more complex to arrange than you may imagine.

Though take a look at the Lloyds Lend a Hand scheme to see if suits your circumstances.

Otherwise be patient. The housing market may well drop in the coming months now that interest rates are rising. Difficult too envisage much in the way of good news to the converse.

Dave_Ham

Firstly, word of caution new builds - see the many threads on this forum.

That said in answer to your question; Potentially all 3 of you could go on the mortgage and only the 2 of you live there. This is a more recent style of guarantor mortgage and most of the traditional banks will allow this.

Check the bank criteria or get a broker who knows there way around the system as the banks do underwrite these differently.

The down sides are that depending upon your Father In Laws age, it may restrict your term and therefore may leave you with inflated payments for the first 2 years (assume 2 year fix) Secondly, his income will need to pay for his own commitments still and therefore it will depend on his disposable income whether your mortgage will be "affordable"

If the 3 of you go on mortgage, it is simpler to remove as in 2 years you will remortage and pay an extra £150-£200 to solicitors to remove his name from the deeds and just the 2 of you be on it.

Have brokered quite a few like this given the current climate, it can work but the circumstances need to be correct and everyone needs to fully appreciate the commitment.

Good luck

ncfcstar

Dave_Ham wrote: »

That said in answer to your question; Potentially all 3 of you could go on the mortgage and only the 2 of you live there. This is a more recent style of guarantor mortgage and most of the traditional banks will allow this.

If the 3 of you go on mortgage, it is simpler to remove as in 2 years you will remortage and pay an extra £150-£200 to solicitors to remove his name from the deeds and just the 2 of you be on it.

That's interesting. So it would mean that the deeds of the house also had to include everyone who is on the mortgage?

I've emailed my broker this morning so hopefully he'll be able to point me in the right direction, having 3 of us on the mortgage seems simple (so long as everyone understands the commitment as you say) but I wonder whether in the round it makes the whole situation far more complicated than it should be. Not to sound at all ungrateful!

I'm assuming that if we went with that idea, a mortgage could be agreed now rather than waiting?

Dave_Ham

To be honest, yes it does complicate things but the alternative is/was not purchase the property as there were timing issues.

It would never be the first solution as yes all 3 will be on the deeds.

I assumed from your first post, that the least the broker would have done is see if this is affordable on just your income already and just the 2 of you be on the mortgage?

Dave_Ham

Just thinking out loud and again assume you broker may have checked. If this is a permanent position, some lenders may even include this income now - although this would take time to check policy so maybe ask your broker the question - again....

Good luck

ncfcstar

Dave_Ham wrote: »

Just thinking out loud and again assume you broker may have checked. If this is a permanent position, some lenders may even include this income now - although this would take time to check policy so maybe ask your broker the question - again....

Good luck

Yes we could afford it on both our incomes if we waited, but the issue is that only NatWest would consider our application prior to 3 months before my girlfriend starts her job (and even then the offer only lasted for 3 months, before the build was due to be completed). That's the awkward part of the situation, my girlfriend now feels like she has done her side of the 'deal' but the mockers have been put on it because she doesn't start until September. So that is why this alternative has been discussed between her and her father.

Thanks for all your help.

ncfcstar

I guess as well this would mean that we were no longer considered as FTB.

Dave_Ham

Every bank, building society, the government etc. qualify the status of first time buyers differently...

Some you will be, some you wont..

DVardysShadow

ncfcstar wrote: »

I guess as well this would mean that we were no longer considered as FTB.

For Stamp Duty, no you would not be FTB - but that will probably not be relevant. For anything else, there is no universal definition of FTB, and apart from Government schemes, it is more of a marketing term - anything on offer to an FTB will probably be on offer to you in your circumstances.

DVardysShadow

ncfcstar wrote: »

That's interesting. So it would mean that the deeds of the house also had to include everyone who is on the mortgage?

I've emailed my broker this morning so hopefully he'll be able to point me in the right direction, having 3 of us on the mortgage seems simple (so long as everyone understands the commitment as you say) but I wonder whether in the round it makes the whole situation far more complicated than it should be. Not to sound at all ungrateful!

I'm assuming that if we went with that idea, a mortgage could be agreed now rather than waiting?

Understand that a mortgage is technically against a property in the first instance. And effectively it picks up the people it is against from the names on the deeds of the property - in that all of those people have to sign the mortgage deed for the mortgage to be valid.

As you are buying with girlfriend, you should probably consider a separate deed of trust to deal with any split. If her father becomes involved, it would be insane for you to proceed without it.