Remortgaging with a guarantor?

Sophstar

I own a property with my now ex partner and he wants to sell the house asap to release his funds. I desperately want to stay in the house but in order to do this I need to remortgage to pay him off. This has been calculated to be a remortgage figure of £265k. I am able to secure a mortgage by myself for £119k but need to make up the very significant shortfall.

My mum owns her own property (which is mortgage free) and is willing to use her house as a guarantor until I am able to pay off and remortgage the property in my own right. The only solution the broker I have sought advice from has given me is for mum to release £150k worth of equity and pay the 6.48% interest to secure my house. My mum is retired and so this interest rate would have to be paid by me on top of my own mortgage costs and is not an option I am comfortable with.

Are there any lenders that allow the use of guarantors for remortgage applications and not just the initial purchase for first time buyers? It would be the perfect solution for us both but I'm struggling to find any information on it.

Socajam

Personally, if you can find another solution, I think you should leave your mother out of it
Being retired/mortgage free and living on a fixed income will put your mom in a position that could prove to be disastrous if you are unable to meet your financial obligations.

Sea_Shell

Please don't ask your Mum to risk her financial future just so you can stay living in a house you like.

Even if she OFFERS to help, you need to think very long and hard for what this might mean for her future. By being a Guarantor, in any way shape or form, she could lose her own house, or have no equity left for quality care in later life.

How much is your house currently worth? What is the total equity and outstanding mortgage? Do you have children? Do you NEED a house of this size/value. Can you not get something cheaper that you can afford on your own?

Also, do you have any siblings? How would they feel about you risking Mums finances?

Sophstar

The house is worth around the £305k and our mortgage is down to £202k. In terms of do I need a house this size - it's a very small 2 bed terraced house so perfect size for a single person and due to my work location and me not wanting to have kids, I would realistically never need to move from here. My pay is due to increase by around £16k in the next 5 years so my remortgage of the property would be much better.

If I have to sell, I am unlikely to be able to get back on the property ladder for a very long time due to not being able to take advantage of first time buyer benefits like no stamp duty. Also due to the area's rental market, I will not be able to save a penny if I moved into private rental. I'm not forcing my mum into anything, the options will be discussed properly with a specialist advisor.

csgohan4

Looks like you can't afford to take on the mortgage by yourself, even if your mother agreed to equity release, that high interest as you said is something will burden you further.


Looks like the reality option would be to sell up. You can't afford it, don't break the bank or mother to do so


Bare in mind you were able to buy this house because you had help from your ex partner. So clearly without them you are unable to afford to upkeep the mortgage


Life is full of wants and dreams, focus on the options you can attain now and save hard for the wants

Nebulous2

It's a while since I looked at guarantor mortgages - but what they were interested in was income for the guarantor, not equity. In other words they wanted the guarantor to be able to pay the mortgage if you couldn't.

Equity release has a lot of pitfalls, including the possibility of having to pay a fee to redeem it. That's a high rate of interest, given you can get a mortgage around 2%.

Then there is ownership. If you own the house your mother may have to sign to say the money is a gift. That puts her at risk if she ever needs state benefits or care provided of being deemed to have deliberately deprived herself of her assets.

If she goes on your deeds instead of gifting the money you would have to find a lender happy with that and she could have to pay capital gains tax when you eventually buy her out.

Whatever way you look at it it is very very messy and puts your mother at substantial risk at a time when she doesn't have the income to pay it off and get herself out of the mess.

Would your equity and income be enough to get a one bed flat in your own name in your local area? That would keep you on the ladder and let you rebuild as finances allowed.

downhillfast

Sophstar wrote: »

This has been calculated to be a remortgage figure of £265k. I am able to secure a mortgage by myself for £119k but need to make up the very significant shortfall.

It's not really a shortfall you have, you're not even half way.

Sophstar wrote: »

My pay is due to increase by around £16k in the next 5 years so my remortgage of the property would be much better.

£16k (based on a 4.5x salary multiplier) will only add £72k... which puts you at approx £191k in 5 years time... will you have realistically paid off the remaining £74k capital by then because if not then even in 5 years time you still can't afford it unfortunately.

diggingdude

I would suggest a fresh start where you don't cripple yourself in mortgage payments and potentially risk your mother's security

Thrugelmir

Sophstar wrote: »

The only solution the broker I have sought advice from has given me is for mum to release £150k worth of equity and pay the 6.48% interest to secure my house. My mum is retired and so this interest rate would have to be paid by me on top of my own mortgage costs and is not an option I am comfortable with.

Sheer madness. Affordability limits on mortgages are in place for good reason. Nor are they they set by lenders but by the regulators. You need to move on from justifying to yourself why you should remain in the property. Involving others in your scheme is highly dangerous.

Unfortunately you appear to need to rethink your plans. Be prepared to move further out and commute to your job. Until such time as the future direction of your life unfolds.

Socajam

Here is another thought, would your ex be prepared to take a certain percentage instead of his 50% right now.
I was in a situation like you back in 1989. I went from a 39,000 mortgage to a 60,000 mortgage along with a new endowment policy and trust me it was hell.
Interest rates went up to 15%, I had a good job but was working just to pay the mortgage and pay for my travel to work.
I had barely any food in the house and a couple pounds after pay day. A friend took pity and I rented out my property and lived with her for a while.
It helped financially, but I had to share a bedroom with her two children (I also paid half of all her bills) which helped me too.
I am just saying so that you need to be aware that one emergency and both you and your mother could end up in serious financial difficulties.
At your mother's age she does not need this and do not deserve it.
It's a tough situation, but as someone suggested how about getting a cheaper property that you could afford.

MrCH

Thank god you can't self certify mortgages in this day and age.


Can you imagine all the posers self certifying themselves a brand new Taylor Wimpey home for their brand new Audi to sit infront of.




There would be a huge crisis eventually.