Could Parents Guarantee My Mortgage?

Yttesfor

Hi.

I don't earn a very high salary (~£21kpa) and have 2 defaults on my credit file although both are now settled (one in 2010 & one in Jan). However my parents have offered to give me a large deposit of around £50k and that they would offer some kind of guarantee to allow me to obtain a mortgage, either against their income, or against the value of their house, worth around £400k, which they own outright.

Do you think it would be possible to obtain a mortgage in these circumstances? Are there other option given that my parents are so generous? I would be looking at buying a 2 bedroom flat, for around £180k, and letting out one of the rooms, but I understand I can't take this income into consideration when applying.

Thrugelmir

The recent default will prove to be a deal breaker.

On your salary even with a gifted £50k deposit. A £180k property is out of your price range.

Would suggest that saving some money of your own to add to your parents gift would your best way forward. In the process this will allow time for the defaults to age.

Maintain a squeaky clean credit profile from now on. Any further indiscretions will merely put you back further in your quest.

Yttesfor

Thanks.

I know I wouldn't be able to get a £130K mortgage on my salary but I was hoping that my parents would be able to use the equity in their house to guarantee the difference.

However, I had not realised the default would be so important as I naively thought that because mortgages are secured the credit rating would be less important.

Guess there is a lesson there.

Thrugelmir

Yttesfor wrote: »

I know I wouldn't be able to get a £130K mortgage on my salary but I was hoping that my parents would be able to use the equity in their house to guarantee the difference.

Taking action against a third party to recover a debt is hugely expensive. Forcing sale of a property even more so, as many complexities can arise.

Hence why lenders in general do not offer guarantor mortgages.
Also the profit margin on mortgage lending does not cover such eventualties.