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Implications of being a Guarantor

PierremontQuaker03
PierremontQuaker03 Posts: 345 Forumite
Part of the Furniture 100 Posts Name Dropper Combo Breaker
in Mortgages & endowments
Hi,
I am looking to be a guarantor for my sister who is going thru a divorce and wants to keep the house she is living in etc etc - I said I would look into this as she has been refused the mortgage at the moment - just wonder what the implications are other then the obvious of the bank coming after me if she defaults. Does this affect my credit rating -I already have two mortgages one residential and one BTL, I always remortage every few years - will this affect this - will I have to notify these that I am now a guarantor?
Any advice would be much appreciated.
Thanks

Comments

  • ACG
    ACG Posts: 24,897 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    You would need to mention it for any remortgages.

    I have never done a guarantor mortgage but when i worked for a bank, their stance for anyone who was a guarantor was to deduct that from their borrowing capcacity, eg:
    Mr earns £25k, bank says he can borrow £100k.
    Mr is guarantor on a mortgage of £80k therefore he can now only borrow £20k.

    I have no idea if thats how all lenders would view it or not but I would say with all lenders its going to have some impact on how much you can borrow.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Good for you, but do it with your eyes open. See a lawyer so that you know just what you are getting in to.
    Free the dunston one next time too.
  • themull1
    themull1 Posts: 4,299 Forumite
    If you've already got two mortgages, they will look at your salary to see if you can afford your sisters mortgage as well, should she default. Personally i wouldnt do it.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Could you afford to meet the repayments on your sisters mortgage? With an empty BTL property and your own mortgage to repay.
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