FTB Buyers

Posted on 4 July 2011 by Verity

My partner and I are first time buyers. We are looking at a house on the market for £160K and have a 10% deposit saved already, however we are struggling to find any 10% deposit mortgages. My partner is also self-employed and only has 3 years of accounts as his business is newly established. I see that you can get Guarantor Mortgages where your parent goes guarantor.....my father earns a good salary (in excess of £40K) and has modest savings for retirement but he retires next year (he is 64). Would this go against him being guarantor? If not, how does it work with regards to the deposit as we can't afford anymore than 10% at present? Any advice would be much appreciated. Thank you.


I shall work backwards through your questions and start with your father acting as guarantor.  A guarantor is usually required where an applicant doesn't currently earn enough to support the amount they wish to borrow, but has the earnings potential to take on that debt in the foreseeable future.  The guarantor needs to have sufficient earnings to support any existing borrowing as well as the new mortgage.  In your situation, where it is the amount of deposit that is causing a problem, I do not think asking your father to guarantee the mortgage will change matters.  If your father is willing to increase the amount of the deposit you have, but wants to protect his "investment" there are legal solutions he can choose from and I can refer you to our in house Solicitors Rollingson's if you want?

Your partner's status as self employed can cause problems at the high loan to value (LTV) you wish to Lenders to consider.  However, because he has 3 years accounts available and this is normally the maximum a Lender may ask for I do not see this being an issue.  Obviously I have not seen his accounts, but if they show either a steady or increasing level of earnings over this period a Lender will use the latest figures declared as taxable income.  If not, then they will sometimes use an average of the last 2 or 3 years.

Whilst there may not be a wide choice of Lenders in the 90% LTV market, there are enough for you to have a choice and I would start with which ever bank or building society holds your savings.  If they are unable or unwilling to consider your application I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to offer further advice on your situation.


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.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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