Guarantor Mortgages for First-Time Buyers

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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