So, I am going through the process of buying a house at the moment, offer accepted, mortgage is all agreed, just waiting for the lawyers to do their thing and orf we go. With only a couple of weeks to go until completion, my brother has rocked up and asked if I will be the guarantor for his new rental property, with our retired dad being the actual financial gurantor if/when it all goes hideously wrong.
My question is this: Would it be possible that becoming his guarantor could have some effect on my house buying process? Could the added burden of possible default on my borthers part cause the mortgage company to think twice? Will they see the credit check?
Boring stuff I know but STW is frequently a source of deep knowledge so I thought I would give it a shot, thanks in advance!
Why doesn't he just ask your dad.
Dad is retired and can't satifsfy the income requirements, apparently.
If your dad can't satisfy the lenders income requirements, then he's not
the actual financial gurantor if/when it all goes hideously wrong.
That'd be you. Unless you are 100% sure you'd never be called on to cover the payments by your brother or can comfortably cover it if you were, I'd not risk it even without the question about your mortgage. That's a fairly handy way to let your bro down without causing undue strife as well.
if/when it all goes hideously wrong
When you say "if/when", are you just being flippant, or is your brother someone who has form for not being absolutely reliable? I wouldn't do it anyway, but especially not if the person is someone who cannot be trusted absolutely, regardless of family ties.
with our retired dad being the actual financial gurantor
The implication of this is that he has the capital to cover the rent if the brother fails to pay. Is that really the case? If your father has the money in the form of savings, then I understand that a guarantor is often not needed if the renter pays something like 6 months rent in advance, so your father could simply lend your brother that amount. If your father is unwilling to do that - or if the reality is he doesn't have the money - then I absolutely would NOT agree to being a guarantor, because your brother (and father) are deliberately pretending to you that there is no real risk to you, when that is not the case. That would suggest to me that they do not acknowledge what a big ask of you this is, and such people are far more likely to be unreliable in paying the rent and in reimbursing you if you were called upon to pay it as guarantor.
The other possibility is that your father has the money, but only in the form of equity tied up in his own home. Do you really think he would sell his home (or be able to get a mortgage on it) if your brother failed to pay the rent and you were on the hook for thousands and facing losing your own home because you could not afford his rent and your own mortgage? Equally in such a situation, could you see yourself accepting or even asking your father to sell his home?
I wouldn't.
Tell your brother that your mortgage lender will not allow you.
Don't.
Nope - not a chance.
Blimey. I wouldn’t touch that with a barge pole. Unless you can easily afford to pay his rent for a long time then I wouldn’t want to do it. Just say you can’t afford it.
I wouldn’t.
Tell your brother that your mortgage lender will not allow you.#
This. easy get out, and saves you a potential mess later on.
Aside from the advice as to whether to do this or not, it is very unlikely to affect your mortgage or credit rating. A guarantor is just a contract between you and the landlord/agent, its not a credit agreement so will not show on your credit score, in fact nobody will know anything about it other than the landlord/agent, your brother, you and anyone else you choose to tell.
They will see the credit check, if they decide to check again, but likely you have been through all that. Anyway that will be from some referencing agency and so what, you get credit checked every time you apply for insurance, credit card, anything.
It amazes me
Acting as guarantor is a change to your financial circumstances and your mortgage provider will most definitely want to know.
<div class="bbp-reply-author">scotroutes
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Acting as guarantor is a change to your financial circumstances and your mortgage provider will most definitely want to know.
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I am sure they would want to know about changes to your financial circumstances, but I am not sure I agree this a change. Also how many of us, who are X years into our mortgages and changed jobs, took on a massive bank loan, or guaranteed a relative, have told your mortgage company?
Your brother could offer a larger deposit instead of a guarantor.
My tenants fell out last year mid contract, it cost them about 3k in rent and damage.
I would not be a guarantor, you would be liable for the rent for the balance of contract and any damages beyomd the deposit.
So many landlords have legal ins now its lawyers who persue claims so they go for every penny.
I am sure they would want to know about changes to your financial circumstances, but I am not sure I agree this a change. Also how many of us, who are X years into our mortgages and changed jobs, took on a massive bank loan, or guaranteed a relative, have told your mortgage company?
I suspect that the issue is that until the house purchase is completed, the OP is under an obligation in the small print of the contract he has signed - or will sign - to tell the mortgage company if there is a change in his financial circumstances, which would include the potential commitment to pay X amount for the brother's rent for whatever period. Breach that obligation, and the mortgage company can probably pull the plug and stop the purchase or insist on the house being sold to repay the mortgage.
Once the house has been purchased, I suspect that the situation is different in that the OP would be entitled to take on other potential financial commitments as they saw fit without telling the mortgage company, BUT I suspect that then the landlord's credit check to ensure that the OP could afford to act as guarantor might be negative: if the OP has a 100% mortgage or other debts that mean his total liabilities equal or exceed his assets, he is unlikely to be a good bet for a landlord seeking a guarantor.
If you declare it to your lender at application stage it will affect your affordability and then could affect your mortgage application and any future offer.
If you declare it to your solicitor after your mortgage application and before you move into your new home then it could affect your mortgage offer being honoured by your lender - remember solicitors act for you and the lender.
I'd help out anyone I am close to by giving money, advice, labour, a floor/couch to kip on if need be but I'd never sign as a guarantor for anyone.
OP. Please disambiguate for us. Are you being the guarantor for a BTL that your brother is buying or a guarantor for him as a tenant?
Looks like some confusion in the posts above🙄
All useful and confirms my thoughts. I am/was to be a guarantor for his tenancy in a rental flat. I have now punted that job onto someone else.
Thanks for your comments all.
Not with a 10' stunt cock. Although that may be tainted by my brother's.
your stunt cock has been tainted by your brother's what?
eeeeewwwwww........ that is bad on all levels.
No, I wouldn't. Because, despite advice on here, I did. Rather in this case my BiL went for a payday type loan and asked me to be guarantor for his 30-something% deal. I told him no, and instead got the loan as a personal loan that i then loaned to him. All good, he paid me monthly the same sum I had to pass on to the bank, and then a few months later his situation changed, the money dried up and 5 years later he still owes me over £7K. Once bitten, etc., if there's any silver lining at least he defaulted on a 4.9% loan rather than one where I'd have been crucified for interest as well.
DO NOT DO IT.