Mortgage guarantor: Are banks allowing parents to act as guarantor's anymore?

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Curious81

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Hi all

A question from a couple of first time buyers here. We currently have mortgage approval in principal for 420k€ (both with AIB and EBS) and have a significant level of savings - close to 30%. Despite having steady jobs and a good savings record our mortgage approval has come down considerably (~100k€) in the past year due to tightened lending criteria.

My father has offered to act as a guarantor for us. I want to know if how this works and if there are any disadvantages. I have no doubt about our repayment ability, as we are currently saving about double what our repayments would be at 4% interest - and we have maintained this level of savings for nearly 4 years now. My parents own their home and have considerable savings - well in excess of what they have offered to guarantee (the extra 100k€).

Am I being naive in thinking this is an option? Are banks allowing parents to act as guarantor's anymore?

Many thanks.
 
Is your current approval for 420 or 320?

Have you a property in mind? Perhaps deciding on the house you want first might be better, you might be surprised at what you can pick up without recourse to your parents.
 
The approval is 420 now. It was 530 in March, then 470 in June and now 420 - very frustrating.

We have been looking in earnest for 6 months now. We have seen a few lovely homes just beyond our reach so that's really why this has come up. We're also been outbid on a few.
 
Unless the lending agency is insisting on the guarantee i would be slow to ask parents to guarantee. Usually the guarantee is open ended and problems can arise if the parents die. If it is absolutely necessary you should try and get agreement in writing that the guarantee will be cancelled in a certain timeframe (say 5 or l0 years) provided the mortggage is paid up to date. Your parents should get independent legal advice before signing
 
Just from a purley personal point of view I would be reluctant to ask your parents to act as guarantor. You have mortgage approval of €420,000 and a deposit of €180,000 (you mentioned 30% deposit) - you have very good negotiating room in this climate with a budget of €600,000.
 
Curious81 said:
Hi all

A question from a couple of first time buyers here. We currently have mortgage approval in principal for 420k€ (both with AIB and EBS) and have a significant level of savings - close to 30%. Despite having steady jobs and a good savings record our mortgage approval has come down considerably (~100k€) in the past year due to tightened lending criteria.

My father has offered to act as a guarantor for us. I want to know if how this works and if there are any disadvantages. I have no doubt about our repayment ability, as we are currently saving about double what our repayments would be at 4% interest - and we have maintained this level of savings for nearly 4 years now. My parents own their home and have considerable savings - well in excess of what they have offered to guarantee (the extra 100k€).

Am I being naive in thinking this is an option? Are banks allowing parents to act as guarantor's anymore?

Many thanks.
Click to expand...

Banks have virtually abandoned the guarantor route. Most likely scenario would be for the Bank to expect the individual who would normally act as guarantor, to actually be named on the mortgage(but not the title to property).
 
Being joined on the Mortgage deed or signing aGuarantee has more or less the same effect...the person is liable. The move away from guarantees i suspect that they are open to be contested rather than if a person joined in the mortgage deed.
 
dewdrop said:
Being joined on the Mortgage deed or signing aGuarantee has more or less the same effect...the person is liable. The move away from guarantees i suspect that they are open to be contested rather than if a person joined in the mortgage deed.
Click to expand...

Not from an underwriting perspective though. As a joint applicant you will have to make a full application with supporting documentation, credit check etc. The requirements for a guarantor are a lot less onerous.

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