With a guarantor mortgage, the loan is generally calculated on the guarantors’ income as well as the applicants income. This could mean that the mortgage may be more than the standard calculation used for assessing the applicant for a run-of-the-mill mortgage. The applicant must still prove that they can meet the repayments, however the guarantor may have to cover all or part of the mortgage debt which many lenders generally require as standard. A guarantor will have to prove their income and outgoings, along with the ability to meet the repayments in the event of the homeowner not keeping up with the monthly repayments. The guarantor does not have to be a family member but they do have to agree to the terms as set out by the lender.
Guarantor mortgages in Exeter
If the applicants financial circumstances change it would be possible for the homeowner to take full responsibility for the mortgage, with the lender allowing the guarantor to be freed from the mortgage but that does depend on the lender.
Also there may be a change in the circumstances of the guarantor and being tied to a guarantor mortgage may affect future mortgage applications or other financial arrangements too. Therefore, the guarantor may be affected in getting a standard mortgage for themselves if there had been problems caused by the applicant on the existing arrangement. These are key things to bear in mind if this is a route you're considering going down. However, it is a great way for the applicant to get on the housing ladder and we have helped numerous buyers get a guarantor mortgage in Exeter.
The rates and rules for a guarantor mortgage will vary from lender to lender, so talking to Team Financial Services is the best option so we can look for the best deal that will suit both you and the guarantor. Contact us today for an informal chat and to see what is involved.