Mortgages that are Guaranteed by Parents, Friends or Relatives
A
mortgage
lender will want to be sure you can afford to
repay its money, so it will expect you to prove you have
enough surplus income from work, a pension or other sources
to meet your monthly payments.
If you can't show this, you may still be able to borrow
provided you can convince a relative (your parents, if
you're a first time buyer, or you son or daughter, say if
you're elderly) or a close friend to act as your guarantor.
Even if you can make the repayments without help, you may
find a wider range of lenders willing to consider you if
you strengthen your case by offering a guarantor.
What is a guarantor?
Basically, a guarantor is someone who promises to take responsibility
for your debt. Typically a father, a mother, or other close
relative.
People
who are over 60 are often discriminated against by mortgage
lenders, so they could get their children to act as a guarantor.
The guarantor guarantees that they will
make the monthly mortgage payments, eventually clearing
what you owe, if you default either because you can no
longer afford, or are no longer willing, to pay.
This is not a commitment to be taken lightly.
Once the paperwork is signed, your guarantor is legally
bound and, unless the lender agrees to release them (which
is unlikely unless you offer a replacement), they can be
made to pay out at any time during the mortgage
term even if it means selling their own home.
Who can be a guarantor?
To be accepted by a lender, a guarantor must prove they
have enough disposable income, after paying their own debts,
to afford your monthly repayment too.
But remember
If you can't make your full monthly payment, your mortgage
guarantor will be legally obliged to cough up regardless
of the hardship it causes them.
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