Guarantor 'v' Mortgage Application Help

glp

Hi, My husband and I are wanting to apply for a re-mortgage early next year to change from an interest only to a repayment mortgage which will double our monthly payments to be able to pay off the mortgage before we retire in 12 years
.
Today his daughter has asked him to be a guarantor for rental purposes to help her, her new son and boyfriend to get a place of their own (they are currently living with her mother but need to get out)

I am worried sick about the implications this may have for us.

1 - Will this be taken in to account for our mortgage application

2 - If his earnings are not enough to cover the debt will they come to me to cover it being his wife

3 - Is there a way of being a guarantor for a shorter period of time rather than 6months ect to just help them get their own place initially?

4 - Will there be any kind of 'debt' related to our house if this goes ahead.

Thank you.

Talc1234

glp wrote: »

Hi, My husband and I are wanting to apply for a re-mortgage early next year to change from an interest only to a repayment mortgage which will double our monthly payments to be able to pay off the mortgage before we retire in 12 years
.
Today his daughter has asked him to be a guarantor for rental purposes to help her, her new son and boyfriend to get a place of their own (they are currently living with her mother but need to get out)

I am worried sick about the implications this may have for us.

1 - Will this be taken in to account for our mortgage application

2 - If his earnings are not enough to cover the debt will they come to me to cover it being his wife

3 - Is there a way of being a guarantor for a shorter period of time rather than 6months ect to just help them get their own place initially?

4 - Will there be any kind of 'debt' related to our house if this goes ahead.

Thank you.

1. Yes - It affects affordability
2. No
3. No - He will be guarantor for the duration of the tenancy
4. No - It is an unsecured loan

However there is no need to change to a repayment mortgage, just start saving the extra payment you would have made to build up a lump sum to pay off the mortgage at the end of the term of the loan

glp

Than you very much for your reply and help.

theartfullodger

glp wrote: »

....

....

3 - Is there a way of being a guarantor for a shorter period of time rather than 6months ect to just help them get their own place initially?

Usually he will remain guarantor for as long as the tenancy continues (ie as long as they stay in the property - could be years 'n years), responsible for both rent & any damages. It's a blank cheque he'll be giving: Yes of course they all expect to keep working but people fall out/get sick/lose jobs/have a crisis... Be CAREFUL!!!

4 - Will there be any kind of 'debt' related to our house if this goes ahead.

.

If the landlord pursues him for the ££££ (probably not for some years), gets a court decision in landlord's favour & hubby does not pay he could end up (as with any other unsatisfied debt) with a CCJ, bad credit rating, never speaking to daughter again...

If the landlord/agent have worries about daughter being able to pay reliably/in full that probably tells you all you need to know.

Cheers!

glp

Thank you for your reply. . The daughter isn't working and baby of only 3 weeks old.

This is confirming what I am very concerned about.

ACG

Why do you need to remortgage?
Can you not just overpay on your current mortgage? Double up your repayments and then you have a repayment mortgage without having to apply.

glp

Am I right in thinking you can over pay on an interest only mortgage then? Would this be monthly or a yearly payment? We are with the mortgage works and it was the only method we could do to enable to move to where we are now.

Thanks everyone for your replies, this is very helpful.

G_M

glp wrote: »

Am I right in thinking you can over pay on an interest only mortgage then? Would this be monthly or a yearly payment?

Ask the mortgage provider.

Some mortgages don't accept over-payments. Some accept overpayments up to a certain amount per month/year, most have no restriction.

ACG

The mortgage works is a BTL lender?
I would be careful about making regular overpayments.

If they realise you are living in the property they may call in the loan.

theartfullodger

glp wrote: »

Thank you for your reply. . The daughter isn't working and baby of only 3 weeks old.
..

Is she on the local council (or councils if she has local connections..) housing register/waiting list for council/Housing association property.

How is child's father helping in all this?? Does he work??

glp

I must mention that my husbands daughter is only 18 so she has little or no history of banking and no history of being a tenant, hence him being asked to be a guarantor for her.

As regards the properties, we couldn't sell our original house, so to be able to move, we got both mortgages from the tmw. Original house is rented out but will be put up for sale in the new year and that mortgage will be paid off once sold.

The original idea is that lump sum will be paid off our home when first property sold, and move it to a repayment mortgage to pay the rest off.