Posted on 23 August 2012 by Brian
We are providing a deposit for our son to buy a house, he will be classed as 1st time buyer.
Would it increase our chances if dad is guarantor whom has no mortgage?
Regardless of who is providing the deposit your son will be classed as a First Time Buyer (FTB) if he has never owned a house or flat in the UK or anywhere else in the world. Unfortunately the FTB Stamp Duty Land Tax exemption ended in March, but he will still qualify for any FTB incentives, such as reduced fees offered by various lenders.
There are various options open to parents to help their children get on the property ladder and which one suits you will depend on whether your son can afford the mortgage on his own but has little or no deposit or if he can't afford the mortgage on his earned income. If he can afford the mortgage there are several parent assisted schemes around which allow the lender to advance up to 100% of the property value by also taking a charge on the parents property. In the event of the lender making a loss on the sale of a repossessed property this means they can force the sale of the parents home to make up the shortfall if it is not paid by other means. In other words your home is at risk if your son doesn't pay his mortgage. If he can't afford the mortgage on his own you can either buy in joint names or you can give a guarantee that if he can't make the mortgage payments you will ensure that they are paid in full and on time. Again if there is a loss on sale in possession both you and your son would be liable for the outstanding debt, but there is no automatic right for the lender to force a sale of your home.
I believe we can help you both decide which, if either scheme suits your position 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.
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.