100% mortgage with guarantor

Samipah

I'm wondering if there are any options for a 100% mortgage with a guarantor added to the mortgage ?

All of mine and my husbands income is from benefits and child maintenance right now, this could change in the future. The guarantor would be a family member who owns their own home plus 10-15 rental properties but is 70 years old currently.

I'm just wondering if there are options for zero deposit and possibly interest only.

Tia

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6655469/100-mortgage-with-guarantor

The prospects of a zero deposit, interest only mortgage for individuals with benefits income only are extremely slim. Even with a Guarantor. The lender will wish to see that you can reasonably maintain the mortgage and not reliant upon the Guarantor as the first route of covering the funds.

Has the potential Guarantor agreed their willingness to underwrite your mortgage?

user1977

The guarantor…is 70 years old currently.

So what term of mortgage are you expecting to need?

Samipah

https://forums.moneysavingexpert.com/discussion/comment/81886118#Comment_81886118

I currently own a house with my ex partner that is going through the sale process, mortgage payments have always been paid in full and on time. I will not receive any money from the sale of this property. I moved out when the relationship broke down and have been renting for the last 18 months with my husband, rent has always been paid on time and in full also.

Guarantor is more than happy to underwrite the mortgage for us. It was his idea that we look into it as a possibility.

https://forums.moneysavingexpert.com/discussion/comment/81886123#Comment_81886123

As long as we can get to keep our costs at a minimum really. Currently paying £995 in rent and around £200 towards the owned property a month.

monkey-fingers

You're paying towards the owned property, but aren't entitled to any of the profit?

I'd be hiring a solicitor!

teaselMay

I bought a 25% share of a shared ownership house with benefits income only, started the process this time last year. Only Barclays and I think TSB will lend if your only income is benefits. I went with Barclays who despite their reputation were good and ultimately the simplest part of the whole process.

It may have changed but I needed to have a 10% deposit. (plus conveyancing costs and moving costs)

I needed to borrow around 50K and that was pretty much the limit of what I could borrow given my income.

I don't have a guarantor but they wouldn't have considered one anyway

They'd only consider a repayment mortgage but that's what I wanted anyway

Don't forget at the moment you're likely receiving the housing element of UC or housing benefit towards your rent, if you were to own outright you'd not receive that at all. If you buy by shared ownership you do still receive help towards the rent element but that isn't included in the bank's calculations and so the affordability calculation includes the rent as an expense without including the help you would receive towards it.

In a nutshell, speaking not as an expert just someone who did this last year, it might be possible to buy in your situation but unlikely with no deposit and interest only, and you'd only be able to secure a small mortgage. I'm not sure a guarantor will help.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81886118#Comment_81886118

Isn’t the whole point that the guarantor can pay the mortgage, so the joint income is what is considered. This can come unstuck when the guarantor has other financial commitments and so doesn’t have sufficient surplus income to cover the new mortgage.

Guarantor mortgages are often used by a parent supporting their offspring’s first purchase. In some cases the offspring is a student with very little/ no income at all and the guarantor’s income is the sole consideration.

sheramber

How much Woukd you need to borrow?

Samipah

https://forums.moneysavingexpert.com/discussion/comment/81886401#Comment_81886401

Unfortunately there are no profits to be had after the sale, the house is now worth a fair bit less than we paid for it.

https://forums.moneysavingexpert.com/discussion/comment/81886424#Comment_81886424

Shared ownership is something we will be looking if using a guarantor isn't going to be helpful

https://forums.moneysavingexpert.com/discussion/comment/81886427#Comment_81886427

This is what I'm not completely sure on, our guarantor is a close family member who has said they're happy to help pay the mortgage but they're happy not to be named on the deed

Herzlos

Given the guarantor is 70, I wonder if they appreciate that it no longer means a good reference, and that it's a commitment to pay the mortgage when the other party inevitably fails to maintain payments.

If they are happy with the latter, and presumably have some wealth, it'd be a lot cheaper for them to buy the property and let OP repay it. Same risk but lower interest rate.
Or let OP stay in one of the 10-15 rentals.

Sadly with no savings or job, the chances of getting a mortgage are essentially none. Why are you not expecting to get anything out of the old house sale?

_Penny_Dreadful

Aldmore used to offer a product called Family Guarantee mortgage where you could borrow up to 100% LTV and a family member uses their property for the guarantee. I think it was limited to first time buyers and pulled years ago. I can’t think of any others.