Guarantor Mortgage

triage999

Hi all,

I have an apt tomorrow with a broker as my parents are wanting to act as guarantors to get me back on the housing ladder after losing my home through a messy break up. They both work and earn over 25k per year.

My single income is £40k per year and I’m currently renting at £820pm and can more than afford the payments. I have found a house for £195k. Is the guarantor process a good way forward with no deposit etc? As I’m sick to death of paying someone else’s mortgage for them.

Many thanks

Exodi

The general consensus on these forums is not to mix up friends/family and finance as it can have devastating consequences and there are countless tales of woe daily here regarding family break ups because of defaulting payment.

The best way forward would be to save up a 10% deposit and buy in your own right - naturally this will likely take 2 years if not longer.

If you did want to proceed with a guarantor mortgage, there's usually two different routes of security; a) your parents put in a lump sum of money that acts as the guarantee, if you pay your mortgage with no problems, they get this back (though your OP doesn't sound like they have funds to offer) b) a charge gets put on their house and if you default they would be liable with risk of repossession.

Where do you live out of interest? £820pm rent seems high for someone that is presumably single (and I live in the South East!), could you not rent somewhere for half the cost and save up for a deposit instead...

kingstreet

A guarantor product is to help those short on affordability.

A helping-hand type product (charge over parents' savings or property) is for those with no deposit.

triage999

Thank you. I have my daughter living with me so require a two bed place and I currently live in Devon. The rent includes water, gas and electric as its within grounds of a main house. The rent itself is £675pcm.

I've never previously defaulted on any payments with my mortgage or to parents if I've loaned money so it shouldn't be an issue.

I have a good stable career but a dented credit history due to relationship breakdown. I pay my way every month but just cant get my foot back in the ladder. I owned my in home from 21, im 42 now and sold out to buy with my ex partner. Long story but it didn't work out and I lost the lot.