Guarantor Mortgage |
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Guarantor MortgagesFinding a mortgage in 2010, with the ever escalating house prices,
can seem an impossible dream to many young people. Property prices seem
to be rising faster than earnings, and the average house price for first-time
buyers is now more than four times the average wage. It used to be possible
to find a 100% mortgage when you were starting off in the property market,
but since the credit crunch there are only a limited amount of 90% mortgages
now available.
What is a Guarantor Mortgage? 
The guarantor mortgage is taken out in the purchaser's name, but the guarantor’s
income is used to guarantee the mortgage borrowing. These mortgages are
ideal for graduates, or students likely to gain a professional qualification,
as the house purchaser’s income should aim to rise enough to take
over the mortgage payments in the future, without the guarantor's help.Once the purchaser can prove that they can afford to make their own mortgage payments, they can take on full responsibility for the mortgage and request the removal of their guarantor from the loan. The Guarantor Guarantor mortgages can often be complex, with the guarantor's legal position being complicated, so it is very important that as well as specialist mortgage help, independent legal advice is sought at the outset. A guarantor will not need to pay any money, unless the purchaser fails to make repayments. They are then legally liable to cover the mortgage repayments and are at financial risk if they do not. A guarantor must usually be aged under 60 years to qualify, as their earning capacity is important in some cases to act as insurance on the loan. The guarantor’s income figure can also include any pensions and investments. A guarantor can reduce certain tax liabilities, compared to joint ownership of a property, as there is no Capital Gains Tax and the property will not count as an asset for Inheritance Tax. It is a big responsibility to guarantee somebody's mortgage and the guarantor needs to have financial security and stability to consider such a role. It is important to realise that entering into a financial agreement, such as a guarantor mortgage, with your parent/s or friend can affect your relationship. Many lenders offer reasonable rates for guarantor mortgages, because the risk factor is reduced by having the security of two incomes and the guarantor being financially stable.
Don't worry if you've had past credit or money problems - our panel of lenders offer competitive rates, so fill in the fast enquiry form below or talk to one of our friendly advisors on 0800 043 7474 and find out how we can help you get the loan you want.
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE
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