Help please- guarantor mortgage

ixia

My daughter is a student and a nice wee flat has come on the market at a reasonable price that would suit her perfectly.

Can anyone give me any advice with regard to buying it for her. I would have to take a mortgage out for it but could put up a 20% deposit. She has only a part time job that earns very little so would not be able to be taken into consideration.

We would buy it and make the mortgage payments is this possible? I have seen mention of Guarantor mortgages but I don't know if that is suitable for this situation. Or can we take out another mortgage in our name?

Thanks for any help.

Bigmoney2

ixia wrote: »

My daughter is a student and a nice wee flat has come on the market at a reasonable price that would suit her perfectly.

Can anyone give me any advice with regard to buying it for her. I would have to take a mortgage out for it but could put up a 20% deposit. She has only a part time job that earns very little so would not be able to be taken into consideration.

We would buy it and make the mortgage payments is this possible? I have seen mention of Guarantor mortgages but I don't know if that is suitable for this situation. Or can we take out another mortgage in our name?

Thanks for any help.

Yes it is possible. But the mortgage will be in her name and she will be the owner occupier, you will be a guarantor for the mortgage in the event that she can't pay it, (OK for you to just pay it from the start).
The advantage of this is that when it is sold as it will be her principle residence there will be no capital gains tax to pay, but any profit will be your daughters.
You will however need to be able to satisfy the mortgage status, i.e. not be mortgaged upto the hilt already.

A mortgage in your name will need to be a buy to let, with the mortgage in theory being payed from the rent your tenant (daughter) will be paying you. When sold you will be liable for capital gains tax on any profit.

I don't know how many companies supply guarantor mortgages these days or what the interest rate will be, a broker is probably worth seeing.

ixia

Thank you, I appreciate your quick reply. I thought it might be difficult to get a guarantor mortgage as when I looked online there wasn't many companies coming up who provided the service.

I did think about the BTL however the flat is only £32k, needs renovation but is in a good area where flats usually sell for double. When I looked at the BTL mortgages the minimum amount I could find to borrow was £40 000 so that wasn't any good.

I think you are right and I will need to make an appointment with a broker.

TrickyDicky101

I disagree that you would need a BTL if buying the place in your name.

A broker is the right place to discuss the options though.

Dave_Ham

Agreed on broker. What is your Daughter's part time income?

If buy to let was best solution (and there are some under £40k) it would need to be regulated and therefore definitely a broker case as not all buy to lets will allow this.

Good luck

Let_Us_See

Unfortunately BM2 the only part of your comments I agree with is to speak to a broker/adviser. I doubt a regulated BTL would be best solution, and there are MANY possible solutions to the OP including residential mortgage/2nd res mortgage/single app/joint app/tenants in Common to limit possible CGT etc. etc.

There should be a fairly simple answer to your requirement, so see a broker for a prolonged chat.

amnblog

Ledners dont like guarantor mortgages unless your daugther could afford the bulk of the mortgage on her own and you are just 'bridging the gap' in affordability.

Some lenders will allow a joint mortgage with single ownership where this is less of an issue.

Sounds like the mortgage size and property value may be below lenders minimums.

One for a broker.

ixia

Thanks for all the advice I will definitely look at a broker as suggested. Her income is very low so wouldn't be worth considering basically just pocket money.

Thanks again.

Thrugelmir

ixia wrote: »

Her income is very low so wouldn't be worth considering basically just pocket money.

Then there's no possibility of her obtaining the mortgage in her name.

Let_Us_See

There is! Not solely in her name, but nothing stopping a joint application.