If
you are having trouble finding a mortgage
lender willing to lend as much money as you need,
either because your salary is low, you already have a lot
of debt or you're buying in a expensive area, you might
find they become more amenable if you come up with a guarantor.
What is a guarantor?
A mortgage guarantor is someone who promises to take responsibility
for your mortgage.
They guarantee that if you default on your mortgage either
because you can no longer afford, or are no longer willing,
to pay - they will make the mortgage payments, eventually
clearing what you owe.
This is potentially a major financial commitment.
Once
the deal has been signed, your guarantor is legally
bound and they can be made to pay out at any time during
your mortgage
term even if it means selling their own home.
Your lender is unlikely to agree to release them unless you
find an acceptable replacement, or your salary or the value
of your property has risen significantly.
Who can be a guarantor?
It is most usual to ask a parent, but any relative or even a
long-standing friend can act as a guarantor.
To be acceptable to a lender, they must prove they have enough
disposable income, after paying their own debts, to afford your
monthly repayments too.
But don't forget
This is not an easy option, as you will still have to make the
monthly repayments.
If you can't, or won't, you will be putting your guarantor in
a very difficult position, as they will be legally obliged to
cough up regardless of the hardship it causes them.
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