Finding a mortgage in the current economic climate can seem an impossible
dream to many young people. Property prices seem to be rising faster
than earnings, and the average house price for first-time buyers is
now more than four times the average wage. It used to be possible to
find a 100% mortgage when you were starting off in the property market,
but since the credit crunch there are only a limited amount of 90% mortgages
Raising the usual 10% deposit for a first-time buyer can be very difficult,
and more and more young adults are remaining living at home for much
longer, in order to save for their first mortgage. For some first-time
buyers the only way to get their foot on the property rung is with parents
or relatives' help, and a guarantor mortgage can be the answer.
What is a Guarantor Mortgage?
Guarantor mortgages are usually where parents, or a parent, stand as
security for their child's loan. The guarantor must be in a position
to be able to afford to repay the loan, if necessary,such as when their
own mortgage is near to being completed. The guarantor can also be any
relative, or even a long-standing friend may be accepted under the right
circumstances. A guarantor mortgage can be possible
The guarantor mortgage is taken out in the purchaser's name, but the guarantor’s
income is used to guarantee the mortgage borrowing. These mortgages are
ideal for graduates, or students likely to gain a professional qualification,
as the house purchaser’s income should aim to rise enough to take
over the mortgage payments in the future, without the guarantor's help.
To calculate the amount you can borrow, the lender will multiply the
guarantor’s income, but then subtract any outstanding credit commitments,
such as their own mortgage or other loans. Some lenders require the
guarantor to only cover the shortfall on the mortgage, while other mortgage
companies require proof that the guarantors are able to cover the full
house purchase amount. Lenders are able to offer more money towards
a guarantor mortgage because they have combined incomes supporting the
Once the purchaser can prove that they can afford to make their own mortgage
payments, they can take on full responsibility for the mortgage and request
the removal of their guarantor from the loan.
Guarantor mortgages can often be complex, with the guarantor's legal position
being complicated, so it is very important that as well as specialist
mortgage help, independent legal advice is sought at the outset.
A guarantor will not need to pay any money, unless the purchaser fails
to make repayments. They are then legally liable to cover the mortgage
repayments and are at financial risk if they do not. A guarantor must
usually be aged under 60 years to qualify, as their earning capacity is
important in some cases to act as insurance on the loan.
The guarantor’s income figure can also include any pensions and
investments. A guarantor can reduce certain tax liabilities, compared
to joint ownership of a property, as there is no Capital Gains Tax and
the property will not count as an asset for Inheritance Tax. It is a big
responsibility to guarantee somebody's mortgage and the guarantor needs
to have financial security and stability to consider such a role. It is
important to realise that entering into a financial agreement, such as
a guarantor mortgage, with your parent/s or friend can affect your relationship.
Many lenders offer reasonable rates for guarantor mortgages, because
the risk factor is reduced by having the security of two incomes and
the guarantor being financially stable.
Specialist remortgaging services can make a remortgage easy with a
competitive choice of fixed and variable rate deals. Don't put it off
any longer - do it today and you could soon be reducing your monthly
What is remortgaging?
Remortgaging is transferring your mortgage from your existing lender
to another lender without moving home.
These days switching loan providers is easy, and with interest rates in the
UK still relatively low, it's still a good time to consider remortgaging.
Remortgaging has risen sixfold over the last five years. Recent figures reveal
that more borrowers are choosing to remortgage and take advantage of the availability
of better rates and competitive deals, rather than the expense of moving home.
Find your remortgage
Homeowners can save themselves thousands of pounds by remortgaging,
and reduce their monthly payments within weeks.
Many homeowners do not realise the savings potential of remortgaging, especially
in our present competitive market. Your original mortgage
lender will not reward your loyalty with a reduction in rates. Financial advisors
recommend shopping around for the best mortgage deal, as with home and car
More than half of all borrowers are continuing to pay over the odds
for their mortgage each month. Remortgaging can save you money or reduce
the term of your mortgage. Your personal circumstances may have changed
and you may want to consider a different type of mortgage. If you are
approaching the end of a fixed-rate or discount period you should start
shopping around some months in advance. Comparison sites or independent
brokers can assist in finding you the most competitive remortgage rates.
If you are paying a standard variable rate (SVR) then you can potentially
save thousands of pounds over relatively short periods, by switching
to lower-rate fixed, discounted or tracker deals.
Someone with a £100,000 loan who switches from a standard variable
rate deal could save about £1,000 a year for each one-percentage
point reduction in their interest rate.
Remortgaging is not only about saving money. A remortgage can easily
release equity that has built-up in your property's value.
Changing to a better mortgage deal, as well as being an excellent way to make
immediate monthly savings, will also enable you to get hold of some extra
Borrowing through your mortgage can often be much cheaper than taking out a
personal loan. You can choose to remortgage for the remainder of your mortgage,
or more if you want to release some equity.
Remortgaging can be the best choice of loan to consolidate all your debts,
replacing outstanding personal loans and credit card debts.
Instead of the expense of moving house, releasing equity from your property
can enable you to make home improvements - such as a new kitchen or bathroom
or an extension - increasing the value and improving your living space.
Choose the right mortgage option for you - Fixed, Discounted, Capped
- A Fixed-rate mortgage will give you certainty,
so you can carefully regulate how much to spend each month. The rate
is generally fixed for 2- 5 years.
- A Discounted mortgage can offer a reduction to
the standard variable rate for a specified period. If interest rates
subsequently fall, then your mortgage payments will also go down.
However, if rates rise so will your payments.
- A Capped-rate mortgage fixes a limit on the rate
you will pay. Despite interest rates rise your payments will not
go above that set level. If rates fall below the set limit so will
Flexible mortgages are an ideal choice for people with fluctuating
incomes, or who want to clear their mortgage early. This flexible option
allows overpayment and underpayment when you choose, without any penalty.
Repayment mortgages are now much more popular than interest-only mortgages.
The poor performance of endowment backed mortgages has convinced many
homeowners to switch to a repayment mortgage, where borrowers know
for certain that they will be able to pay back the loan.
How to Remortgage
Your new lender will value your home - they'll take care of all the
paperwork and deal with your existing lender.
Some lenders offer remortgaging services with free legal work and valuations,
and it usually takes about a month to complete the remortgage.
You can find a Remortgage or Mortgage product to suit your own individual
- Rent arrears
- County Court Judgments
- Bank & other defaults
- Old repossession orders
- Credit problems
- Discharged Bankruptcy orders
- Unusual Properties
- No income proof