How to get a mortgage with a guarantor
What is a guarantor mortgage?
A guarantor mortgage enables you to buy a home with the help of a guarantor (usually a close relative). To obtain one, your family member not only needs to agree that they will cover the mortgage if you fail to keep up your monthly payments. But also offer their property or savings as security against the loan.
If your guarantor chooses to use their property, the lender will secure a charge against their property. Once an agreed proportion of the mortgage has been repaid, this is then released. Similarly, if they use their savings instead, they will need to pay a percentage of the property’s value into a secure account. The money is then held for an agreed period and if the lender also pays interest, your guarantor will receive this on top of the amount they originally deposited, if you keep up your repayments.
Due to the potential repercussions of you failing to make your mortgage payments, seeking advice from an independent mortgage broker like Fosters Financial is crucial. We can help you to discover whether this type of mortgage would be the best option and explore any potential alternatives, so you can make the right decision for you.
What do you need to be a guarantor?
Most mortgage lenders will require your guarantor to be a close relative and they will need to:
– Have a good credit rating
– Be aged between 18 and 65 years old
– Have substantial savings or a good amount of equity in their own property.
How much can I borrow?
Typically, the amount you can borrow will be based on the size of your deposit and your affordability. But some mortgage lenders will allow you to borrow up to 100% of the property’s value.
Bad credit guarantor mortgage
If you are struggling to get approved for a mortgage due to a poor credit record, then a mortgage with a guarantor could be a great option. But you could also qualify for a bad credit mortgage, which will eliminate the need for a guarantor.