Increasing borrowing capacity

sdanseo

Very early in the thought process, but I have recently started to seriously think about buying an apartment or small house. Apologies in advance if below questions are as a result naive and stupid - I know quite little about the whole process and regulations. I'm currently 31, single, and like so many others living at home. With my current salary I could borrow approximately 150k and would hope to have a deposit of around 25k to 30k in two years time for a total budget of close 180k. No dependants to worry about yet.

My question is, can a parent going guarantor (if they were willing to do so) potentially increase the maximum amount I could borrow? The reason I ask is that a mortgage of 150k comes to around 700 a month over say, 25 years. I could comfortably afford half that again.

Of course that assumes circumstances don't change which could always happen, so a double barrel is, if this arrangement is allowed, would mortgage or income protection insurance cover everything?

Jim2007

sdanseo wrote: »

My question is, can a parent going guarantor (if they were willing to do so) potentially increase the maximum amount I could borrow? The reason I ask is that a mortgage of 150k comes to around 700 a month over say, 25 years. I could comfortably afford half that again.

To be honest I would advise them not to do this. Because property is a high risk investment no matter what some people argue and if anything were to go wrong they would be on the hook for it and at their age the last thing they need it to face loosing some property are assets and gain debts going into retirement.

Trish56

I don't think any lenders currently have an appetite for guarantors and if they did would only lend up to age 68/70 so the term would be a problem.

daheff

Could they borrow some money on a short term basis (5-7 years) and give this to you? Let you repay this borrowings on their behalf?

Not an ideal situation, but if its a means to an end?

amcalester

sdanseo wrote: »

Very early in the thought process, but I have recently started to seriously think about buying an apartment or small house. Apologies in advance if below questions are as a result naive and stupid - I know quite little about the whole process and regulations. I'm currently 31, single, and like so many others living at home. With my current salary I could borrow approximately 150k and would hope to have a deposit of around 25k to 30k in two years time for a total budget of close 180k. No dependants to worry about yet.

My question is, can a parent going guarantor (if they were willing to do so) potentially increase the maximum amount I could borrow? The reason I ask is that a mortgage of 150k comes to around 700 a month over say, 25 years. I could comfortably afford half that again.

Of course that assumes circumstances don't change which could always happen, so a double barrel is, if this arrangement is allowed, would mortgage or income protection insurance cover everything?

Can you comfortably afford it at +2% interest rates?

gogo

Banks don’t really take guarantors anymore but most banks will look at a mortgage on a joint borrowings sole title basis.. as in your father or mother go on the mortgage with you but in general it would be under that assumption that they would come off the mortgage down the road when your circumstances improve. It’s esentially the same thing as going guarantor but has a stronger grasp as it names you’re parents on the loan.

Normally done where the child is entering into solid professional employment, and your potential earnings/future employment down the road is strong, but your currently on a smaller salary scale. They won’t do it on the basis that your parents would never be able to come off the loan. Hence the title remains on your name and removing them from the loan can be done in house cost free.

If your not in strong, solid employment it won’t happen. The end goal would be to take your parents off the loan. Doing this would mean a full application for your parents as well and would also be noted on their credit reports, so may effect their own future lending requirements when its in place. It’s this that normally turns people off doing it.. your effectively saddling your parents with your mortgage.. they may not be repaying it, but it’s still there on their credit reports.

Just lately had a lovely retired bank manager have a heart attack because he was declined a loan .. all because he had a joint mortgage, sole title with his son.. understand the implications of it before going down that route.