Guarantors

Our standard acceptability

Acceptable

Criteria definition:

Indicates if we accept guarantor applications.

Policy Notes:

Normally the Society would require the Borrower’s income to be sufficient to service the proposed new mortgage advance on its own and the application will be required to pass the Society’s affordability test. The Society can however consider applications where a guarantors income is required to support the applicant (or even repay the mortgage) and in circumstances where the Guarantors income is required to service the loan in any way in addition to that of the Borrowers, full verification will be required and the case must pass the affordability test, taking into account any outgoings that the Guarantors may have. Our expectation is that the borrower would be in a position to take on the full mortgage repayments after approximately five years and we would expect them to be in an employment that is likely to lead to that growth in income.

Guarantors should be close family members. i.e. mother, father, brother, sister etc

Warning Notes:

• The Guarantor will not have any legal right to the property and their name will not appear on the deeds.
• It may be difficult for the Guarantor to be released from the mortgage contract unless an acceptable replacement can be found or the Borrower’s incomes have increased.
• Up to two Guarantors can be added.
• The Mortgage Term may be restricted due to the Guarantor’s age.
• Guarantor cases will be assessed on a case by case basis however normally Guarantors must in all cases be able to:    
• Cover 100% of the total loan amount, this figure will appear in the Deed of Guarantee. 
• The guarantor’s income must cover total borrowings i.e. the Society’s loan (100%) plus their own mortgage and any other commitments. 
• Be a close blood relative, generally father, mother, brother, sister (Not spouse) 
• Guarantor mortgages are aimed at those whose income may be a little short of that required to support the loan requested  and consequently consideration will be given to applicant’s future ability to maintain full mortgage payment. (current earnings expected to rise over time and will meet affordability requirements in the future) Ideally we would wish the applicants income to be sufficient to support the mortgage within 5 years.  
• We unable to assist where the main applicant has little or no income of their own – for example students, or where it is unlikely that the applicants income will reach a sufficient level to support the loan. 
• only on purchases, £ for £ switches or transfers of equity (T of E). No capital raising will be permitted 
• Income and affordability will assessed taking into account the income and commitments (including any property/housing costs) of the guarantors.
• Resolve any Pre-decease issue– i.e. if parents are supporting their children how would the mortgage remain affordable should a parent pre-decease the child.

• Cases that we will not be happy to support will include:  
• Where the applicant has little or no income of their own and is unlikely to reach a level of income to support the loan .
• Applications for capital raising

Criteria categories:

• general
• Policy

Last updated:

29 August 2018