100% mortgage guarantor

janie63

My daughter & her fiance are buying a discounted sale property from Barratts for £78k.. They need a 100% mortgage and have asked me to be their guarantor.

Can anyone advise me what this involves?
Will it effect my own credit file/rating?

Where's the best place to get a 100% mortgage as I know that they are very hard to come by at the minute.......

herbiesjp

Bristol & West about the only 100% mortgage left

Tiddler_2

The B&W 1st start mortgage (also available from Bank of Ireland) are not your traditional guarantor mortgage. On these mortgages you are actually a joint mortgage holder rather than the guarantor.

You can choose whether you want to be on the title deeds or not.

The obvious downside to helping someone out in this way (and it's the same being a guarantor) is that you are responsible for the payments if the 'kids" can't or don't make the payments.

Another downside is that once your are on the mortgage, you can't get out of it until such time as they can afford it themselves. The lenders have also recent introduced a change in that you can't get out of it until the loan to value is 95% or less.

Here's a link to how this scheme works

http://www.1st-start.co.uk/

poppy10_2

You are potentially risking your own home if you do this.

Don't do it.

Tiddler_2

poppy10 wrote: »

You are potentially risking your own home if you do this.

Don't do it.

Why/how are they risking their own home?

silvercar

Tiddler wrote: »

Why/how are they risking their own home?

This from a mortgage broker!:o

They fail to keep up repayments, you (as guarantor) can't make the repayments. Lender repossesses. Negative equity so you end up owing money to the lender after the property has been sold. Lender chases guarantor, guarantor can't pay. Lender puts charging order on guarantor's home. Guarantor falls behind with payments, lender goes to court for repossession of guarantor's home.

mightymouse

Hi

Post 3 answers this point re guarantor:-

The obvious downside to helping someone out in this way (and it's the same being a guarantor) is that you are responsible for the payments if the 'kids" can't or don't make the payments.

It could be a while (years) before the loan is less than 95% of property value in a falling market?

Tiddler_2

silvercar wrote: »

This from a mortgage broker!:o

They fail to keep up repayments, you (as guarantor) can't make the repayments. Lender repossesses. Negative equity so you end up owing money to the lender after the property has been sold. Lender chases guarantor, guarantor can't pay. Lender puts charging order on guarantor's home. Guarantor falls behind with payments, lender goes to court for repossession of guarantor's home.

That's why we tell them to take independent legal advice

To be honest the same could be said about any debt anyone takes out, mobile phone contract etc - that it could cost you your house because it can be converted into a charging order

janie63

Thank you for all your replies. After careful thought and a LOT of research we have decided that the Bristol & West first start mortgage is too much of a risk for all of us.The guarantor option is rife with pitfalls and as various people have pointed out could potentially land all of us in trouble. They've now decided to stay living with us and continue to save...........

Will I EVER get my spare room bacK??? So much for being an 'empty nester'!!!LOL

JasonLVC

Tiddler wrote: »

To be honest the same could be said about any debt anyone takes out, mobile phone contract etc - that it could cost you your house because it can be converted into a charging order

A mobile phone contract will have a debt value of around £200. I'm not aware of any phone contract or vehicle contract hire or indeed most finance loan products for fridges or whatever that require a security upon a property.

You can even get unsecured loans upto £25k from most providers - unsecured, meaning, not secured against an asset.

There's a big difference between a voided mobile phone contract and purchasing a house in excess of £78k. I think it dangerous to compare the high risks associated with acting as a guarantor on a mortgage with that of a few hundred quid loan/contract - they are not the same both in value and in terms of law.

Tiddler_2

My point was that any company that you owe money to, on an unsecured debt can apply to the Court to have it secured against the property (through a Charging Order) if the bill is unpaid, and goes to a CCJ. It is all down to the judge's decision.

Remember that we are talking about the shortfall, from a repossessed & sold property (so now an unsecured debt) being transferred to the guarantor's property.

Yes, I know it is unlikely to happen for a few hundred pounds, but that doesn't mean it couldn't happen