Guarantor mortgage - how does it work?

CATS

Hi Guys,

I am hoping someone can help with this. We have an existing property but want to purchase a bigger house. We do not want to sell the existing house as we would not get anywhere near what it cost us. Our bank have said that they would give us permission to let so we dont want to use this property at all.
The new house we want needs remodelling and there are a few things that we need to fix. The house is valued at £350,000 and the deposit we have is £70,000. However I want to borrow £300,000 as when you take into consideration stamp duty, solicitor fees, arrangement fees etc, the £70,000 will not go far with regards to money left for the repairs etc. We have a joint income of around £90k - £100k but even with this we wont be able to borrow around the £300k due to the LTV.
We were hoping to ask either my parents in law who no longer work but have no mortgage left and their house is valued at around £400k or my mother's partner who does work earns maybe around £50k + has no mortgage left in his house to act as guarantors for the rest.

However I am not sure how this works and if they would be suitable. I dont want to borrow money but maybe this way they dont actually have to hand over hard cash but just say they would help if needed (which they wont )

Hope that makes sense.
Thanks

amnblog

CATS wrote: »

We have a joint income of around £90k - £100k but even with this we wont be able to borrow around the £300k due to the LTV.

Sounds like the right amount of income for this level of lending?

CATS

Really? if that's the case that would be great. I have input some details on a calculator and it's giving me lower than this. Maybe I need to speak to a financial advisor. Maybe it's because they are taking into account the money that needs to be paid on the other mortgage. But if no guarantor is needed it will be even better. Thank you

amnblog

We are assuming that the other property pays for itself as a let property.

Santander can be quite agressive in the way they factor that in if not.

CATS

Will the lender see it that way? will I have to give them the letter from the bank saying they are ok for us to let or will they need the house to be let already or have some sort of tenacy agreement
Sorry what do you mean about Santander? as they are more likely not to factor the other mortgage? Also how would they determine how much we can borrow, everywhere that I do a calculation shows the max as £255,000 ish

Dave_Ham

Speak to a broker about this as this should be achievable. Not sure which calculators you have used, but you should be able to achieve what you require subject to the specific detail.

Good luck