Would you use a guarantor for your mortgage?

Getting onto that first rung of the housing ladder is no mean feat these days. Becoming a homeowner has been a challenging business for over a decade now, as wages stagnate, house prices skyrocket and mortgages before ever-tricker to obtain without a sizeable deposit.

A few years ago, it was often the job of "The Bank of Mum & Dad" to help young people out with their deposits. But, as times become leaner, even older generations are finding it hard to come up with the capital to help their children buy their first homes.

This financial climate has spurred on the rise of the guarantor mortgage, a product which is very similar to a guarantor loan, but used to provide security for mortgage providers lending to a riskier, younger client group.

Just like a guarantor loan, guarantor mortgages work by asking a financially stable individual to guarantee the mortgage of another person who may be viewed as "higher risk" by a lender. This perceived risk could be due to a range of factors, from a small deposit, to a poor credit history or a slightly rocky employment history. If the mortgage-seeker should find themselves unable to meet a mortgage repayment, responsibility for that repayment would fall to the guarantor.

This is one way in which the Bank of Mum & Dad can still support younger generations with housing. Although funds for deposits may be depleted, parents may be in a position to guarantee their children's mortgages, particularly if they are confident their youngsters will be able to shoulder the repayments.

Would you guarantee your child's mortgage? Do you think guarantor mortgages are useful idea or a risky proposition?

At Choice Personal Loans we don't offer guarantor mortgages, but we do connect borrowers with guarantor loans from trusted lenders. To find the best fit for you, contact our finance experts today.