Getting a Boost To Get On The Property Ladder

It is one of dreams that many of us have, buying a property and getting on the property ladder.

No more Mr. or Mrs. Landlord, our own little piece of property that we can do with what we wish.

However, while qualifying or a mortgage does not have to be that complicated, there is one small matter of a deposit, that can be an issues for some home buyers.

We may be able to afford a house and to repay the mortgage, but we need to save for a deposit, and then there also is the high cost of property. High prices also means a larger deposit.

Higher prices also means a larger mortgage, and once again the only way to reduce the mortgage amount is to have a larger deposit. And for many people, saving for the deposit is the real issue.

There are some mortgages available that will accept a lower deposit, but there can be some conditions attached to this, and once again you have the issue of a larger mortgage loan which means larger monthly payments.

Parents to The Rescue

Many parents want to help their children get on the property ladder, some may want to help them just to get them out of the house.

More and more grown kids are staying at home with their parents as they save up for a deposit to buy their own home. And with property prices going up, the brass ring always seems out of reach.

Some parents may help with a gift or loan of cold hard cash, giving their children the deposit to buy a property. However, not all parents have that kind of dosh lying about.

But there are other ways family can help.

Guarantor Mortgage: A guarantor mortgage is just what it states, a mortgage that has a guarantor on it; a guarantor is someone who will pay the monthly payments should the borrower fail to do so.

A guarantor can be a family member, such as your parents, an Aunt, Uncle, or grandparents. A guarantor can even be a good friend.

The main thing about a guarantor mortgage is that you may be able to borrow more, and by getting a large loan you can purchase a more expensive property.

The lender looks at the borrower’s income and expenses, but also at the guarantor’s as well, this si to make sure the guarantor can afford to repay the loan if they are needed to do so.

Joint Mortgages: Joint mortgages are loans that are in both names, which could be the son or daughter, and their parents.

These types of mortgages allow the borrowers to get a larger loan amount due to the parents income(s) being considered as well as their child’s, who is the main borrower.

One downside to this type of loan is that if the parent or parents already own a home, this would be considered a second home, and so would be subject to the higher stamp duty for second homes.

Offset Mortgages: These types of mortgages are where a family ember may have savings that they can pledge as an offset to the loan.

An example may be your parents have £30,000 in savings, and you want to buy a £150,000 property. By pledging the £30,000, you only need a mortgage of £120,000, which reduces your monthly mortgage payment.

The only downside is those that pledge their savings lose out on any interest they may earn, however, there are some mortgage loans that will pay interest on the money pledged, and only hold the savings for a set period of time as it is expected that the property will appreciate or go up in value.

Gifted Equity: If a parent does not have a huge pot of savings, they may have a huge pot of equity built up in their own property. They can gift this equity in different ways.

One way is to sell the property they have at a reduced price, which reduces the amount of mortgage their children may require to buy the property, and instantly gives them equity in the property.

If a property is valued at £150,000, and a parent owes £50,000, and they sell the property for £100,000, they can pay off their own mortgage loan, and their children only need a £100,000 mortgage for a property valued at £150,00.

Another way to gift equity is to put some of the equity in their property as security for the new mortgage loan their children are taking out to buy their own property.

If a parent has £100,000 equity in a property, they may pledge £50,000 of it as security on a new mortgage their children are taking out. This security has a lien against their property, and should the children default on their own mortgage, it could put the parent’s home in jeopardy.

The time frame for the charge against the parent’s home can be a set time, say 10 years.

So there are some ways parents can help their children get on the property ladder, by giving them a little boost up the way.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.