A mortgage with a guarantor is a common option for many first-time buyers and even those who are moving.
In this article, Sett explains what a mortgage guarantor is, the risks and benefits, as well as how to secure a guarantor mortgage.
What is a mortgage guarantor?
A guarantor mortgage is also known more commonly now as a joint borrower, sole proprietor mortgage and is designed for people who do not have enough income to qualify for a high enough mortgage on their own. This means that if you cannot afford a property on your own, you can increase your borrowing by having someone else you trust on the mortgage but not on the deed.
This is an excellent choice for people with part-time jobs or low income. Be aware, if you are unable to make your mortgage payments for any reason, the mortgage guarantor will agree to cover them.
What are the benefits of buying a house with a guarantor?
The main advantage of a guarantor mortgage is that you may be able to obtain a mortgage even if your circumstances appear to preclude you from doing so. For example, if you have a very low salary and are unable to borrow anything for a mortgage from a bank, having a guarantor means lenders are much more willing to lend you money since there is a level of security and more income to use.
Some lenders will also allow the guarantor to contribute to the deposit for the property too
Are there any risks of being a guarantor for a mortgage?
Although guarantor mortgages have many advantages, there are certain risks for the guarantor to consider. As a guarantor, you are legally involved in the property purchase and are liable for paying the mortgage if the borrower is unable to do so. If you are unable to make the mortgage payments, you are at risk of losing your home and significantly harming your credit.
How to get started with getting a mortgage with a guarantor
To get started with guarantor mortgage, contact an expert mortgage advisor who can explain what it is, whether you are eligible, and what deals are currently available to you. Sett Mortgages has experience in guarantor mortgages and is ready to help you find your dream property, so contact us today.