Guarantors can help you get your first buy to let
A mortgage guarantor for a buy to let can be used each even if your income is low or non- existent and you are a first-time buyer.
For example, a mortgage guarantor for a buy to let could be a parent earning £25,000 (or more) and is willing to help you purchase the property – if so you’re already halfway there!
Frequently Asked Questions on Mortgage guarantor for a buy to let mortgage
Question 1: How is the mortgage guarantor for a buy to let mortgage set up?
Answer 1:
- With up to of 4 individuals on the mortgage.
- At least one individual must go on the title deeds.
Question 2: How is affordability assessed on mortgage guarantor buy to let mortgage?
Answer 2:
- Income is assessed on the highest two earners only.
- Income can be derived either from the planned Title Deed Holder or the Mortgage Guarantor.
- At least one of the individuals must be on a minimum of £25,000 per annum. This must be earned
income it cannot come from property. The Title Holder does not need to be earning.- The buy to let rental income on the security property must exceed the expected mortgage payment by a healthy margin. This is to provide a surplus to smooth tenant void periods, cover letting management and other property related costs.
- All individuals need to demonstrate they can maintain their lifestyles and credit commitments.
Question 3: Who can be a mortgage guarantor for a buy to let mortgage?
Answer 3:
- Naturally, the Buy to Let Mortgage Lender would think the mortgage guarantor would be a relation. However, the Mortgage Guarantor for a buy to let mortgage could be unrelated, such as a friend, but they would need to understand why they are willing to act as a guarantor.
- The Mortgage Guarantor for a buy to let does not have to be a homeowner themselves.
Question 4: What is minimum deposit requirement on a Mortgage guarantor for a buy to let mortgage?
Answer 4:
- Twenty five percent.
- This deposit can be by way of a non-repayable “gift” from the Mortgage Guarantor.
Question 5: What happens if the Title Holder or Guarantor have had credit problems?
Answer 5: Neither the Title Holder or Guarantor can have shown any signs of failing to maintain their credit commitments in the last six years.
Question 6: Do the Title Holder or Guarantor need to have prior buy to let mortgage experience?
Answer 6: No the Title Holder can be a first time buyer and first time landlord. The Guarantor does not need to have or had a mortgage.
Question 7: Can the Title Holder or Guarantor live in the property when the mortgage goes through?
Answer 7: No, this is a buy to let mortgage as must be let to tenants who have no relationship with the Title Holder.
Question 8: Can the Title Holder or Mortgage Guarantor live in the property in the future?
Answer 8: No, neither the Title Holder(s) or Guarantor(s) should be intending to live in the property at the point of taking out the mortgage. If future circumstances change and they want to move in then they will discuss this with the Mortgage Lender at the time but permission is unlikely to be granted. Instead they would probably need to remortgage under standard mortgage assessment rules applied to the then Title Holder’s income only.
Question 9: Should the Mortgage Guarantor seek legal advice?
Answer 9: Yes, the Mortgage Guarantor should seek independent legal advice. Although they will not be going on the title deeds they will still be fully liable for the repayment of the mortgage. Failure to keep up repayments may result in the property being lost. The mortgage will also form part of any assessment on their own future borrowing.
Question 10: How does Stamp Duty work?
Answer 10: Normally, only Title Holders are subject to Stamp Duty. However, we are NOT Tax Advisors and full independent tax and legal advice should be sought.
If you want to find out more on the Mortgage guarantor for a buy to let mortgage then complete the Contact Form on this website or call T: 020 7993 2044.
