Guarantor Mortgages???

Lewigreg081281

Hi,

Me and my girlfriend are currently on the lookout for a new property, we have a apartment currently and it will be financially better for us to rent this rather than sell.

We are looking at buying another property and i have around 16k deposit so far. We've seen a property at 180k, so at the mo im slightly under in terms of a 10% deposit.

We where thinking of saving a bit longer. The current mortgage offer we have is with HSBC on their discounted SVR rate currently 3.84%. This comes product free and is for 2yrs.

I've noticed whilst researching that guarantor mortgages are available to first and second time buyers. Would we be able to get one of these and are they worth it??

I've found one with The Post Office at 2.89% tracker for 2yrs with a 25% deposit. I have spoken with my parents and they are happy to guarantee a deposit.

How do they work are they special products? or can you find any competitive product and have the deposit guaranteed?

Thanks

somethingcorporate

Guarantor mortgages will put the liability for paying your mortgage with your parents. Would you really want to do that? Have a look around the loans board for guarantor loans going horribly wrong and ripping families to pieces.

It would probably make more sense to borrow from your parents (or as a gift) to make your deposit a bit bigger and get a decent rate on your own two feet.

Lizling

There are a few different sorts out there, but how they generally work is that the guarantor guarantees the whole mortgage, often with their house as security i.e if you don't pay, they lose their home to cover the bank's loss.

There are a couple available where the guarantor has to keep 25% of the value of the house in a linked savings account as security instead, but 'guaranteeing the deposit' as you've put it isn't an option I've come across.

The one you mention sounds like you'd need to find the deposit yourself and your guarantor would be responsible for the rest of the value of the house (although I haven'y looked up that specific offer myself.)

Think very carefully and do your research before taking on one of these, imo. I've been looking into them recently because I'm in much the same position as you, but we ruled out anything that could end up costing my parents their house.

Lewigreg081281

Going to just avoid the guarantor route we can borrow more than enough and hopefully should be able to get the 10% deposit needed.

Does anyone know of any decent 90% mortgages at the mo? I've found a couple of low rates.

HSBC 2 yr special discounted rate at 3.84% this is based on their SVR.

Also found a 3yr 4.29% tracker with Yorkshire building society.

Not sure which would be best at the mo.