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Acting as Guarantor
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Pingpong999
Posts: 3 Newbie
Hello
It's my first post here but wondering if anyone can help and advise please?.
Our 21 year old daughter has saved £23k as her deposit for her first home. She has a good secure job and been with her present employer for the past 2 years. Her basic salary is £23k but with overtime and bonuses etc, can be as much as £26k per annum. She has all her payslips detailing this as confirmation along with her P60.
She sought financial mortgage advice from the local estate agents who said in principal, could afford up to £150k over 35 years at £450 per month (ish). The rentals on the property demand £900 per month so sees buying as a much better option.
She found a lovely place recently and made an offer which was accepted. She progressed her application with an independent fully credited mortgage broker. After 5 days, she was advised that her application was unsuccessful as she was £10k short. The broker asked if we (her parents) could give her the £10k but unfortunately, we are not in a position to do so just yet.
My question is this, could we have been guarantors for the £10k without parting with £10k in cash? , someone at work has mentioned this to me but the broker never made any referral to us about this?. We both have good jobs and own two thirds of our own home. We are both a bit confused as mortgages seem to have changed so much these days. We would have happily been guarantors for the amount as shes a good saver and a wise head on such young shoulders.
Any help or advice would be greatly appreciated, we have emailed and called the broker but had no reply unfortunately. Thank you in advance.
It's my first post here but wondering if anyone can help and advise please?.
Our 21 year old daughter has saved £23k as her deposit for her first home. She has a good secure job and been with her present employer for the past 2 years. Her basic salary is £23k but with overtime and bonuses etc, can be as much as £26k per annum. She has all her payslips detailing this as confirmation along with her P60.
She sought financial mortgage advice from the local estate agents who said in principal, could afford up to £150k over 35 years at £450 per month (ish). The rentals on the property demand £900 per month so sees buying as a much better option.
She found a lovely place recently and made an offer which was accepted. She progressed her application with an independent fully credited mortgage broker. After 5 days, she was advised that her application was unsuccessful as she was £10k short. The broker asked if we (her parents) could give her the £10k but unfortunately, we are not in a position to do so just yet.
My question is this, could we have been guarantors for the £10k without parting with £10k in cash? , someone at work has mentioned this to me but the broker never made any referral to us about this?. We both have good jobs and own two thirds of our own home. We are both a bit confused as mortgages seem to have changed so much these days. We would have happily been guarantors for the amount as shes a good saver and a wise head on such young shoulders.
Any help or advice would be greatly appreciated, we have emailed and called the broker but had no reply unfortunately. Thank you in advance.
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Comments
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Guarantor mortgages exist, but your guarantee would generally be for the full amount, not a small fraction of the loan.0
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Sounds more like an affordability / income multiple issue, which being a guarantor might not help (and also isn't really the go-to option at this point).
Hard to tell without knowing more about the full financial picture and mortgage requirements.
Speak to the broker - They are the only person currently in any position to shed any light on where the issue is. They probably won't speak to you without the permission of your daughter, which may well be why you haven't yet had a reply.0 -
I would also add that if you were to be guarantor make sure you could pay the mortgage if for any reason your daughter couldn't. My husband is guarantor for my daughter, she like your daughter had a good job and excellent prospects and could easily afford the mortgage repayments. Fast forward 2 years and she became chronically ill and couldn't work ( even if she had taken out insurance it wouldn't have paid out because at the time it was classed as a mental illness where as now its classed as neurological). She has never defaulted on the mortgage so we've never had to pay it but if we did we could still manage it.
I don't think there are many BS which do guarantor mortgages but her broker would know.0 -
They actually want the £10k. Thats how much she is short of being able to buy the house. So its not a question of being a "guarantor" for that, a guarantor steps in when someone cant pay (usually a loan or as in another post, the mortgage itself. In this case, since she's £10k short, there's no question of "promising" to pay it, they need it to pay the person whose house is being sold.
In any case if you cant provide £10k, what on earth are you doing promising to be a guarantor for it? You are promising something you cant deliver !0 -
The lender will probably take into account whether or not the quarantor can afford to pay this mortgage if the borrower cannot pay. They will see that you already have a mortgage of your own to pay. Possibly this could affect things?0
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Try another broker"A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
Ride hard or stay home :iloveyou:0 -
That's interesting, this is the kind of information that we were requiring. Many thanks for the heads up.0
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We simply cannot hand over the. £10k right now due to having paid for our other child's wedding. This does not mean we are stony broke, we could afford our own mortgage and act as guarantor on the £10k, if this was a feasible option. Hence why we've asked the question if thee was such a product out there. On the advice of others, there doesn't seem to be such product, but at least we now know.0
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Pingpong999 wrote: »We simply cannot hand over the. £10k right now due to having paid for our other child's wedding. This does not mean we are stony broke, we could afford our own mortgage and act as guarantor on the £10k, if this was a feasible option. Hence why we've asked the question if thee was such a product out there. On the advice of others, there doesn't seem to be such product, but at least we now know.
I still think you've misunderstood the basics.
Example, Ignore expenses of buying .......
She's buying a house for, let's say £173k.
She has £23k deposit.
She wanted to borrow £150k but they will only lend her £140k,
That leaves £10k missing, which is needed to pay the person whose selling the house !
So there's no "guarantor" issue here, what do you think this product would guarantee ? The seller wants the missing £10k. You also have twice said you can't afford the £10k but yet would wish to guarantee it ! Again, how would that work?
Maybe it's the fact it's houses that is confusing you? Another example, if it was a car, divide the numbers by ten, car price £17k, she could only borrow £14k and had £2k savings how could you "guarantee" the missing £1k? The car dealer wants the £1k.
Bottom line, she finds someone that will lend her £10k more, or buys a cheaper house , or saves up £10k or earns more. No criticism implied but Someone that can't find a spare £10k is frankly not in a position to be offering to be a guarantor on £10k let alone a mortgage because guaranteeing it means you may have to provide it, it's not just words.0 -
I assume they meant she could afford a £150,000 house? So with £23,000 deposit that would be £127,000 mortgage. Even with a lender that's willing to take into account all her overtime and make her salary £26,000 that's still an income multiple of 4.88 which is very high.0
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