The main requirement for obtaining approval for mortgage loans from the guarantor is that the guarantor has a strong relationship with the buyer. An adult with a significant balance in their savings or equity account in their own home can become a guarantor of the mortgage of a child or adult family member. This is usually contractually limited to only 20% of the total amount borrowed. Respecting your freedom to say Yes or No, or Wait, and an appreciation that your actions will also financially affect another person while presenting themselves as a Guarantor for you, is the first step in preparing for the opportunity and increasing the responsibility that another may offer you.
Although having a parent or family member as a guarantor is great for young borrowers, it can be risky for the guarantor. One of the main risks is that if your child is unable to repay the monthly mortgage loan, you may be responsible for at least the portion of the loan you secured. To be eligible for a guarantor mortgage loan, you will need to have a family member willing to act as a guarantor. The guarantor will also have to own a home.
This is because the home equity is part of the guarantee for your first mortgage loan. Home equity is the difference between the value of your property and the remaining balance on your mortgage loan. A guarantor is someone (usually a family member) who helps secure your mortgage loan and potentially increase your borrowing power.
