Guarantor Mortgages
With house prices continuing to increase, many first time buyers are looking to parents and relatives to act as guarantors to the mortgage. Many young people see house prices increasing faster than earnings and this is pushing home ownership even further out of reach. Many people struggle to find the 5 to 10% deposit which is normally required, and therefore are unable to take out a conventional mortgage.
Particularly popular with students who want to get on the property ladder, is the guarantor mortgage which is available if parents can afford to repay the loan. The parents would need either to show that their own mortgage is near to finishing or they have sufficient income. They are able to hold the mortgage in their child's name, acting as guarantor, or they can buy the property as a buy-to-let. Their son or daughter could then rent out rooms and the revenue generated should pay the mortgage.
Guarantor mortgages can also be ideal for graduates. Some banks will offer loans on the prospect of rising income over the next few years and much of the marketing is aimed at young professionals. There are several on the market today including 100% loan guarantor mortgages which are fixed. With today's economic climate there are a variety of different guarantor mortgages. Some specify that guarantors need only prove they can cover the shortfall, while others stipulate the full amount. For example, a trainee accountant on £25,000 could borrow £100,000. The apartment they want to buy is £145,000. Some guarantor mortgages may require the parents to pledge all the costs, whereas some products may only require the £45,000 excess to be covered.
Our specialist mortgage advisers are experienced in finding the right mortgage in any situation. If you would like us to help you to find the best deal available for you or for help and advice, please click on our Mortgage Enquiry Form below and one of our experts will contact you. Alternatively, you can give us a call on 0845 108 0505.
