Guarantor - good or bad idea?

Hi, myself and my boyfriend are looking to buy a house and my parents have offered going guarantor on it for us, my boyf is not too keen on the idea but it would give us a bigger budget which is still much needed in dublin even given the current market ! Does anyone have advice on this subject? Advantages/disadvantages?

evi3 said:

Hi, myself and my boyfriend are looking to buy a house and my parents have offered going guarantor on it for us, my boyf is not too keen on the idea but it would give us a bigger budget which is still much needed in dublin even given the current market ! Does anyone have advice on this subject? Advantages/disadvantages?

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Personally, I agree with your boyfriend. I never understand why people are willing to put their parents property on the line just so they can borrow more money. The banks will lend what they think you can afford to pay back. If you need more, save. People might disagree with me but I would never forgive myself if my circumstances changed and my parents ended up in trouble because of it. Have you gone directly to the banks or used a broker? A broker might be able to work on your application so you can get more if you need it.

Hi, I know what you mean but it would take years and years to save the amount we need. the mortage we are currently being offered is 340k but I am going for a promotion in work so hopefully that will boost it up. My parents are very well off so wouldn't be putting their property in danger at all and we would take them off the mortage after 3 years as you can do this if you have proved you can make the payments yourself.

Bad idea. You need to work within your own budget, save what you need for a deposit and then borrow what you can afford. Parents going guarantor is all very well today but if circumstances change it might not look so good then, for a big financial decision like a mortgage I think you'd be better to stand on your own two feet.

Evi3

I can see where your bf is coming from - may be some male pride issues etc.

Before you use your parents to help you borrow more money than the bank thinks you can pay back I would think long and hard.

What if you or bf are made redundant - what can you afford to repay per month now ?

Whether people want to admit it or not we are in a down turn and jobs are being lost every day. How secure are you both.

Sorry for the pesimism but you need to think things through and look at worst case as well as best case

Good Luck

Yeh will have to give it a good think through... its just so tempting when you see what you can get for more money but probably better off waiting a year and seeing what our salaries are like then....

evi3 said:

Yeh will have to give it a good think through... its just so tempting when you see what you can get for more money but probably better off waiting a year and seeing what our salaries are like then....

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.....and see what the market is like then also.

I'd be very weary. I don't think it's down to male pride - my parents offered but I wasn't interested.

Aside from your own financial position, I'd also consider your parents.

What age(s) are they? If near retirement, would you be putting their home at risk? Would they have sufficient time (years) to recover if worst comes to worst?

I'd also be concerned about using a guarantor when the couple are not married...

I dont see a problem with getting a gurantor. I had my parents as gaurantor when I got a mortage in 05. They went gaurantor on 50k of the mortgage. Since then my salary has increased and I have moved mortgage providers and now my parents have no link to my new mortgage. If I held off and "saved" as some people suggest the house would have cost me an extra 85k if I bought today.

If you are sure you can meet your repayments and you are happy with the property and the price then go for it.

Worse case scenario if you can't meet your repayments is you have to sell, but theres a lot of things that can be done to avoid that e.g. rent rooms. And its likely your salaries will increase if you are good at your job.

It's too complicated a question to answer...it can be a good or bad idea depending on the circumstances. If for example the parents are loaded, the 'child' has good career prospects and the 'child's' relationship is sound then it's probably a good idea. I have heard of examples where parents go guarantor for a child who is a trainee accountant or solicitor with very little money but good prospects. Banks are cute too though-they will look for a belt and braces situation if they know there's cash there. If it helps someone get on the property ladder, isn't a risk to the financial wellbeing of the parents, all parties are happy to do it, and non-marriage situations are covered legally then it can be a great idea. All FTB/stamp duty issues must be dealt with appropriately also. There are many threads on this site describing unethical practices where people are/aren't put on deeds or mortgages to avail of or avoid certain scenarios. Put simply, don't take legal advice from a mortgage broker or bank-get a decent solicitor.

evi3 said:

Yeh will have to give it a good think through... its just so tempting when you see what you can get for more money but probably better off waiting a year and seeing what our salaries are like then....

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Out of interest, what is the difference in mortgages being offered with and without a guarantor?

We have been offered an extra 100K ...