Can a mortgage guarantor live abroad?
Answered on 11 August 2019 by Nick Morrey
I live in the UK and want to take out a guarantor mortgage, but the person I’d like as my guarantor is a British expat. Can they still be my guarantor if they live abroad?
It’s highly unlikely that a lender would allow someone who’s based overseas to act as a mortgage guarantor, even if they’re a British expat.
A guarantor agrees to ensure the mortgage payments are made in full and on time. They also agree that they can be pursued for any outstanding money in the event of a loss on repossession, as if they had been the borrower themselves.
We explain why lenders won’t accept overseas guarantors below.
Does It Make a Difference Where My Guarantor Lives?
The point of a guarantor is to pay the mortgage should you, as the borrower, be unable to. The lender needs to be able to enforce this obligation, which could be incredibly difficult if the guarantor is situated overseas.
Firstly, the lender would have to deal with the laws and protocols of another country. This could present potential barriers when they attempt to take legal action in pursuit of payment.
Secondly, the logistics involved in tracking the guarantor and arranging payment would make it difficult if the guarantor was situated across borders in Europe, let alone on the other side of the world.
How Else Can I Get a Mortgage?
Guarantor mortgages are rare nowadays anyway. There are alternative options on the market, such as joint borrower sole proprietor and joint mortgages. These are available to expats, which could potentially solve your overseas guarantor issue.
Joint Borrower Sole Proprietor
A joint borrower sole proprietor arrangement is the modern day alternative to a guarantor mortgage. It’s a mortgage setup where 2 or more people are full borrowers on a single mortgage, but not all of them are proprietors, i.e. not all of them are registered on the title deeds as owners of the property. You can have a mortgage with a joint borrower sole proprietor arrangement where one of you lives abroad; this would be an expat mortgage with a joint borrower sole proprietor setup. Either of you could act as sole proprietor but if you’re selecting this option as an alternative to an overseas guarantor, then it would make more sense for the expat relative to act as a borrower only, not a proprietor.
A joint mortgage with someone who lives abroad as an expat would be a typical expat mortgage.
Expat mortgages are quite common but can be complicated to organise, so it’s best to speak to an expat mortgage broker, like John Charcol.
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Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
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