Guarantor mortgage

sasp

Just wondered if anyone can advise me on guarantor mortgages.

Basically my OH and I had to sell our property a while ago due to money problems. We paid off our debts and have been renting for a while and saving up for a deposit to hopefully buy a property.

Long story short our credit rating is shot at and the best mortgage offers are at a ridiculous rate of APR and we are so scared of falling into the debt trap again.

We have a deposit (about 10% of 100,000) and my mum in law has offered to be a guarantor (she has no mortgage).I don't know anything about guarantor mortgages really and just wondered if anyone else had been in a similar situation.


We would obviously prefer to go it alone and not involve her if at all possible, but I don't want to use these shark companies either.

Any help would be greatly appreciated.

PasturesNew

Save for another 5 years, prices aren't going up.

Stay out of trouble financially and by then you'll have a huge deposit and any iffyness will be another 5 years behind you so you'll be able to do it without high interest rates and without a guarantor. All your own work!

sasp

PasturesNew wrote: »

Save for another 5 years, prices aren't going up.

Stay out of trouble financially and by then you'll have a huge deposit and any iffyness will be another 5 years behind you so you'll be able to do it without high interest rates and without a guarantor. All your own work!

:T Thanks PN to be honest I am happy to stay put (still feeling once bitten twice shy) but my OH hates renting (dead money as he calls it).

PasturesNew

sasp wrote: »

:T Thanks PN to be honest I am happy to stay put (still feeling once bitten twice shy) but my OH hates renting (dead money as he calls it).

Not as dead as buying at £100k today, only to have it worth (say) £70-80k in 5 years' time. Or what if it's worth £50k in five years?

A mortgage is only renting from the bank after all. As you found out before. If you aren't keeping up you're still out on your ear. It's not yours until the last payment.

merlinthehappypig

We've been renting for the last year and, by my reckoning, can now buy the house we are currently considering with a £50000 smaller mortgage than this time last year after taking into account interest on the money, savings on the mortgage, insurance & repairs and falling house prices.

I'd quite happily chuck some more 'dead money' at the landlord for that sort of return.

Doozergirl

sasp wrote: »

:T Thanks PN to be honest I am happy to stay put (still feeling once bitten twice shy) but my OH hates renting (dead money as he calls it).

Would he prefer it if the bank came after his mother if you ran into financial difficulty? The pride that makes him want to buy should be the same pride that stops him from using his mother to protect him financially.

There will be a time where you can get a regular mortgage with a good rate and you will have a higher deposit. You save £2 in interest payments for every extra £1 you put down as deposit. In the short term, while you save each £1 you're spending less than £1 on rent, iyswim.

Houses won't be any more expensive in a couple of years time.

sasp

merlinthehappypig wrote: »

We've been renting for the last year and, by my reckoning, can now buy the house we are currently considering with a £50000 smaller mortgage than this time last year.

I'd quite happily chuck some more 'dead money' at the landlord for that sort of return.

You are so right, I sold a property on the estate I rent on (long story) and I saw a similar property for sale for 20000 less than I sold mine 3 years ago.

I wish I had a crystal ball to see 5 years into the future!:D

My situation isn't helped by an over helpful MIL, IYKWIM!;)

sasp

Doozergirl wrote: »

Would he prefer it if the bank came after his mother if you ran into financial difficulty? The pride that makes him want to buy should be the same pride that stops him from using his mother to protect him financially.

There will be a time where you can get a regular mortgage with a good rate and you will have a higher deposit. You save £2 in interest payments for every extra £1 you put down as deposit. In the short term, while you save each £1 you're spending less than £1 on rent, iyswim.

Houses won't be any more expensive in a couple of years time.

Thanks Doozer, this is what I have been telling him (not to mention the fact that I don't really want my MIL involved, but THATS another story);)

flipcat

stick at it where you are,if its working for you now then continue to do so,like PN said buying is only renting from the bank,we all have such a snobby attitude in this country that we have to buy,go to france,germany etc its a different story,live for now.Dont rock the boat if you dont need to.House prices will come down and then you will a bigger deposit as another poster has said.

merlinthehappypig

sasp wrote: »

You are so right, I sold a property on the estate I rent on (long story) and I saw a similar property for sale for 20000 less than I sold mine 3 years ago.

I wish I had a crystal ball to see 5 years into the future!:D

My situation isn't helped by an over helpful MIL, IYKWIM!;)

Our situation isn't helped by a MIL (and FIL) who want to move in with us...........

pinkshoes

sasp wrote: »

:T Thanks PN to be honest I am happy to stay put (still feeling once bitten twice shy) but my OH hates renting (dead money as he calls it).

a) How much is the interest rate on the £90k you want to borrow? Then how much will this be per month in interest that you pay to the bank?

b) How much are you currently paying in rent?

if (b) is less than (a), then there's no point buying, as you'll end up paying more to the bank in interest than you already pay in rent.

If your rent is more than the interest, it might be worth considering buying, but bear in mind that prices might drop in the short term in some areas, so this should be a long term purchase, where you see yourself living for the next 10 years!