Obtaining a mortgage as a first time buyer can be difficult. The ratio of the average house price to average salary is higher than its ever been. That makes it hard to save a big enough deposit and hard to afford the repayments. As a result there’s an ever growing increase in people looking for support through solutions such as a first time buyer guarantor mortgage.
The solution that is more commonly offered by lenders these days is what is known as a “joint borrower, sole proprietor” mortgage. This is where someone such as a parent is added to the mortgage for affordability purposes, but will not be living in the property or added to the title deeds. One great thing about this solution is that because they are not added to the title deeds, no additional stamp duty will be applicable.
Although there are several lenders offering this solution, not all do, so it’s important to speak to a mortgage broker to discuss your options. You also need to factor in the age of the ‘guarantor’ as potentially they will be retired before the mortgage term ends.
As for the ‘guarantor’, they need to understand the impact on them. It may make impact their ability to borrow money or raise capital in the future. As a result lenders will require the guarantor to seek independent legal advice before proceeding.
Before you even start thinking about how much you can borrow, or what type of property to buy, the first important step is to make sure you’re likely to be eligible for a mortgage. To help you with this, we’ve created a short quiz that will indicate whether or not you’re likely to be accepted.