Help: reduced income, huge mortgage, end of deal

jonesMUFCforever

Fairdo wrote:

The security the lender takes is on the property being bought, NOT the Guarantors assets.

So will you please explain what would happen if the guarantor was called to pay and could not do so?
eg B/soc is forced to foreclose mortgage - no equity in property - they call on guarantor to pay- he refuse or cannot pay- what would they do then? Why bother taking a guarantee at all , as I have said its just a useless bit of paper unless they have it secured.
Eric

MarkyMarkD

I don't see guarantors generally having to provide their own property as security. The fact that there is both the borrower's and the guarantor's income as a guarantee of payment significantly improves the lender's position, without the second property being security for the loan.

But of course, if the guarantor defaults on their guarantee, their property is at risk to the extend that any unsecured borrower's property is at risk.

Fairdo_2

ejones999 wrote:

So will you please explain what would happen if the guarantor was called to pay and could not do so?
eg B/soc is forced to foreclose mortgage - no equity in property - they call on guarantor to pay- he refuse or cannot pay- what would they do then? Why bother taking a guarantee at all , as I have said its just a useless bit of paper unless they have it secured.
Eric

I don't make the rules. I just work within them.

Whenever I have done a Guarantor mortgage, there has never been a requirement to use the Guarantors property as security.

I expect the risk to them is that their credit record could be diminished by non-payment of the Guarantees mortgage and it enforces their trust of the Guarantees good charachter, because by Guarantoring for a mortgage restricts the Guarantors options during that time, as they have to disclose this for any further borrowing. Therefore, the Lender will see it as a further assurance of future good payment.

Generally a Lender will expect a minimum deposit of 5% anyway and that seems sufficient to them.

What Guarantee is there of a non guarantored mortgage being kept up. A person can lose their job without taking out prior protection and can default or worse on the mortgage.

It's down to degrees of risk, but believe me, a Guarantor mortgage is not a "walk in the park" to go through. There are plenty of conditions and checks on affordability still.

Pinkleylandii

Just a thought, what about a interest only mortgage? I presume you have a repayment. There is obvious risk, you are relying on the property going up in value rather than repaying some of it every month but you may save approx £250 per month and may be your wife just until the kids are a bit older goes to work in the evenings about 3 nights per week to help, it is managable working and looking after young kids, it is hard and I have done it but to keep your house this may be an option. Being practicable on that size mortgage and a family you are not going to have much money but selling your house is a drastic step. It may be worth speaking to your lender and advising them of the situation some mortgages have a 6 month holiday period whereby you can hold off payments to help, you need to seek specialist advise but I don't think another lender will give you the mortgage of 130k based on your salary bringing family in could become messy try approaching the lender direct and see what they have to say. They might offer you a fixed rate on interest only at less than you expect you could then work out what you wife would need to earn to keep you afloat until school/3 years old childcare. It is not in there interest to reposs the house, they may be willing to work with you until your wife can go back to work. You will get help with childcare when the bairns turn 3 years and are allowed a grant for 12.5 per week family could then help with childcare and your wife could work part time. Look to try and sort the period up till the bairns go to school, when you can get help with childcare, wife can go back to work and family help things hopefully things should then get a bit easier and you could then go back to repayment. TRY THE LENDER FIRST you do not want bad credit history so see what he has to say. Elaine