Guarantor Mortgages

It can be daunting getting on the property ladder. If you live in an expensive area such as the South East in general or even worse in London, then getting your own place can seem to be almost impossible unless you want to live in the remotest parts with an unpleasant daily commute to work to face!

However, there are various options out there that can potentially help. One of these is known as a guarantor mortgage, and the name gives an inkling as to what the product is, and how it works.

This mortgage is for those whose parents are willing to help them get on the ladder, but don't want to (or don't have the money to) do this through a lump sum given to you towards your mortgage to get you started.

Rather the way this product works is that your parents guarantee your mortgage to the lender. If the lender won't give you enough for the place you want, even if you feel you could meet the payments, then a guarantor mortgage could be the resolution.

The idea is simple: the amount you can borrow goes up because your income and your parents is taken into account, although it does mean if you are unable to meet the payments for whatever reason then your payments will need to cover what you can't manage, and if they can't do that in turn then even their own property could be potentially put at risk.

Of course for most this doesn't happen, but the fact that it can means that everything needs to be thought through clearly upfront and your parents will need to understand the implications of what could happen in the worst case scenario so that they go into it with eyes wide open. In most cases of course after a while you are able to meet the repayments yourself as your income goes up as you progress up the corporate lader, at which point everything can move into your name alone and your parents support from the mortgage can be removed.

One con to consider is that there is often a condition in place that whoever gives the guarantee is under 60 years old, which may exclude quite a few people with first time buyers going up and up in age all the time and now is hovering at 30. But if that's not a hurdle, then a guarantor mortgage could be worth considering if your parents are willing to help out and understand the risk.

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