JBSP vs Guarantor Mortgages

dude7691

Hi All  

Bit of background first. I'm 21, living in Wales and have about £44k saved up at the moment. In early 2023 I'm looking to buy a house costing about £100k. At that time, I'd have around £63k saved, assuming £3k for buying costs I'd have about £10k left over as an emergency fund, meaning I'd be looking at getting 50% LTV with a £50k deposit.

The issue I have is that I'm currently studying an Economics degree at the OU. I'm due to graduate in 2024, but am considering taking a 9 month break from May 2022 to Feb 2023 to get a job and get a mortgage to buy a house in Swansea or around that area, a 2 bed terraced probably. I'd be looking at getting any job I can, in retail or hospitality and more than likely a zero hours contract because of the way that industry is, plus permanent contracts being virtually impossible to get at my age. 30 hours a week min wge would give me about £13k a year annually, allowing me to in theory borrow £58.5k. I'd leave the job immediately (or cut hours to 8-12 hour a week if possible) once the mortgage is secured and the house is bought, and then continue with my degree. I have a self-employed income of around £4k a year doing very part time online work, with the ability to increase that to significantly more if I increased my hours. My student grant is nearly £6k, and renting out a room in the property would net about £3k a year after increased costs (council tax increase etc.), I'd be charging well below market rent to keep this income flow near constant. 

However, due to the nature of the potential job contract, I know most mortgage companies wouldn't go for this. Therefore, I've been looking into guarantor mortgages. One of my parents earns a decent amount (over £40k) and already owns a house, and said they'd consider this option in principle. As far as I understand this one, their asset (home) is used as collateral against the mortgage I take out, and can be repossessed if the proceeds from selling my home if it was repo'd don't cover the outstanding amount. Realistically, I'm never going to default on payments, they're about £210 a month on £50k borrowed over 40 years @4%, easy for me to pay. I'm aware of all the extra living costs owning a home, can comfortably afford it. Remember also I have £10k in the bank spare in case the roof falls in or something else happens

Also, I've been looking at joint borrower sole proprietor mortgages and as I understand them they take into account parents income as well as my income, and allow us to pay the mortgage "together" with only my name on the property deeds which means no second home stamp duty charge (LLT here in Wales), can someone confirm this please? Not interested in borrowing extra, just the £50k still as the bank would be happier with this. I'd be paying the full amount in this scenario too. I haven't done a huge amount of reading around this as the information online is somewhat lacking. 

Just to check as well, can I use a Lifetime ISA with both of these mortgage types? 

In summary, I'm looking for which option I'm more likely to get approved for. I'm fully aware buying now is expensive and property is likely in a massive bubble, but quite honestly I don't care. Property was in a "bubble" in 2001 and then went up for another 7 years and "crashed" 15%. I wouldn't be at all surprised if property doubled in 5 years at this rate. Don't plan on ever selling the property. I'd rent it out if I moved away for whatever reason, or sell it if the market value increased and put it towards the cost of another property. Even if I lost money somehow, it's a risk I'm willing to take in order to avoid being priced out. 

Thanks in advance