I don’t have enough income can my parents help me buy a property?
If you cannot afford a property in your own right how about buying with your parents via guarantor mortgages?
At Niche Advice we have access to a Mortgage Lender, who in our view offers the ultimate guarantor mortgage, read on to find out how it could allow you to jump onto the property ladder and avoid dead money that is renting.
I should stress that Niche Advice arranges mortgages and are not tax advisors. Separate independent legal and tax advice is highly recommended.
How does the Guarantor Mortgages work?
- Up to 4 applicants
- Option as to who goes on the mortgage deeds
- Minimum age of the applicants is 18 years
- Simple product switch facility to change mortgage holders in the future
- Potential tax advantages
- Standard interest rates
- Up to 90% loan to value i.e. just 10% deposit
Example Scenario: Parents helping their children buy near to a university
Peter and James Jones are studying at Nottingham. Peter has a part-time job in a café but James has no earnings. In short between them buying a property is farfetched. Their parents, Tim and Jess own a mortgaged property in Surbiton, met and continue to work in the IT sector. They previously thought about purchasing a property for their children but were told that the mortgage has to be on a family buy-to-let basis, stamp duty was high, the deposit size and the rates were prohibitive. Furthermore they did not feel comfortable in setting up a tenancy agreement with their kids.
How did the guarantor mortgage help them all?
The guarantor mortgage lender allowed them all to be party to the mortgage. The affordability was assessed on the income Tim, Jess and Peters earned less all their domestic monthly bills. The guarantor mortgage lender did not insist on Tim and Jess going on the title deeds, which avoided second home taxation. The Jones’ got to pick from the guarantor mortgage lenders standard mortgage product range. The After graduation Peter got a good job and decided to stay in Nottingham. He re-contacted the guarantor mortgage lender and arranged for his parents to be removed from the mortgage as he could now afford this in his own right.
For an example of Products and Rates of a Guarantor Mortgage click here.
Niche Advice is an independent mortgage broker that prides itself on providing clear and appropriate mortgage advice on straightforward or complex transactions; including guarantor mortgages
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.