Parent as Guarantor

M

mel21

Guest
Hi,

I am looking at buying a house worth €400,000 however can only get a mortgage for €350,000. My parents have said they will go Guarantor for the difference.

Can someone explain to me how this work, can they just put their names down as Guarantor or do they have to hand over their Property deeds to the Mortgage company for the amout in the difference????????????

Also with the recent announcements from the Revenue Com. about Parents helping their Children in first time buyer housing, will my Stamp dudy exemption be affected? I am looking as a first time buyer to buy a house in a new development.

All information and advice appreciated.
tHANKS
 
I did something similar, all it involved in my case was a letter of gaurantee from my father. This letter was drawn up by the bank and then signed by him. His name is not on the mortgage. You wont be affected by the Rev's recent announcement, that is just for people who are abusing the first time buyers stamp duty thing. In your case you are the purchaser and living in the house with your parents as gauranter for a portion of the mortgage. There wont be a problem.
 
Actually, could you explain to me how this whole guarantor option works?
Thanks,
Ina
 
Hi, we did something similar for our first house. Got a letter from my father outlining that he had sufficient funds to cover the balance required. Didn't have to submit any bank details or deeds from parents house. My dad was included on the mortgage, but after 2-3 years my dada & I wrote to ICS and got him removed on the grounds that we ad proved ourselves capable of paying the mortgage on time and in full. Very easy process and no costs whatsoever.
 
Ina said:
Actually, could you explain to me how this whole guarantor option works?
Thanks,
Ina
Click to expand...

Well, this only happens where the lending institution requires a guarantor for part of your mortgage. If you are borrowing say 5 times your salary the bank might look for a gaurantee from a parent for say 20% of the mortgage amount. So in the case if you cannot pay the mortage the bank can look to your father to pay it or somehting like that but that usualy never happens if you ar confident you can meet the repayments.
 
PeterPP said:
So in the case if you cannot pay the mortage the bank can look to your father to pay it or somehting like that but that usualy never happens if you ar confident you can meet the repayments.[/QUOTE]

yes, it does happen and will happen more and more as people keep buying properties that they can not afford....
Banks give them 100%, parents put their house at risk,etc... money is too easily accessible... People have that thing about "buying a property", no matter what the price is.... They scrap bread brumps, empty the penny jar (or cents jar nowdays) to buy. And this fuels the prices..

Bear in mind, people have sold, do sell and will sale with negative equity... may be not in Ireland yet, but why would it not happen here while it happened/happens elsewhere.

Repossession is the "thing" of the future, and good deals will be on the market for the ones who have been patient enough...

"
PeterPP said:
So in the case if you cannot pay the mortage the bank can look to your father to pay it or somehting like that but that usualy never happens if you ar confident you can meet the repayments.
Click to expand...

Like any good safe car, 0 to 60 (€k per annum) is much slower than 60 to 0....... by loss of job, injury, etc...
Click to expand...
 
bacchus said:
PeterPP said:
So in the case if you cannot pay the mortage the bank can look to your father to pay it or somehting like that but that usualy never happens if you ar confident you can meet the repayments.[/QUOTE]

yes, it does happen and will happen more and more as people keep buying properties that they can not afford....
Banks give them 100%, parents put their house at risk,etc... money is too easily accessible... People have that thing about "buying a property", no matter what the price is.... They scrap bread brumps, empty the penny jar (or cents jar nowdays) to buy. And this fuels the prices..

Bear in mind, people have sold, do sell and will sale with negative equity... may be not in Ireland yet, but why would it not happen here while it happened/happens elsewhere.

Repossession is the "thing" of the future, and good deals will be on the market for the ones who have been patient enough...

"


Like any good safe car, 0 to 60 (€k per annum) is much slower than 60 to 0....... by loss of job, injury, etc...
Click to expand...

Like I said "that usualy never happens if you ar confident you can meet the repayments". i.e. if you can meet the replayments.

Look, house prices (in dublin at least) will never decrease subject to some major major economic downturn. What will you do while you wait a few years for some hopeful downturn in house prices? Rent, live at home? You'll spend 5-6k pa anyways renting a room. We all have to move out of the parents house at some stage. I mean what is the alternative, you are always better off buying and assuming the (very very small) risk of house prices decreasing.
Click to expand...
 
Could not agree more with you, children have to move out from parent's at some stage.....but they should not expose their parents to the incertainy of today over-valued market, full of desperate people who will never own their house b'cos of 35yrs mortgages..
Food for thought.. http://www.housepricecrash.co.uk/

But will i help my kids to buy?... of course i will.

The market is fairly difficult for FTB considering high prices, but what's wrong with renting for a while . "Rent is money down the drain".. well, sort of, but you at least know how much you loose per month...
But hard to save for house when renting...

But is today's market more difficult than 10 yrs ago??? prices were lower, interest rates were 4 or 5 times higher... i have done the sums, but it could well be that the ratio "mortgage/income" is to be same today than 10 /15 yrs agi

Note: in case you wonder, i have moved out of my parent's 15yrs ago, and well up & stable on the property ladder. Either i have been lucky enough to buy at the right places at the time/right price or patient enough to capture the right opportunities.. So i am not trying to convince myself that this is the wrong time to buy :)
 
Ok we're going off the point here, this is just about what a gaurantor is etc, not a discussion on the future of the house market.
 
Parent as guarantor is fine but if they are on the mortgage, even if not on the deeds (if this can happen) then you have a problem with your FTB status for stamp duty. This is probably because if they are on the mortgage with you it's difficult to prove they are not buying with you, even if you are personally meeting all the repayments.
 
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