Should I be a guarantor for my sons mortgage?

We loaned our son some money as a deposit on a shared ownership house as his salary was not quite enough to get the required mortgage amount. It had to be listed as a gift which was fine by us. As we have 4 children we told him he will inherit x gift amount less than his brothers when we die. He is saving up to pay us back and already has over half the amount put away. With shared ownership mortgage and rent together worked out £300 less a month than renting a similar property in that area.
I would never go as guarantor for anyone including family HTH

My father agreed to guarantee my mortgage when I became divorced. I had three children and was getting on my feet and starting a new self-employed business. I've never forgotten his faith in me at a difficult time, it was a great morale boost, and he never had to pay a penny.

A point which seems to be missed here is the posters sons partner. She says that the partner of her son doesn’t work as the child is still small. How many mums can afford to stay at home particularly as the family are struggling to buy a house ?Surely she could work a couple of nights in a care home or supermarket when the dad is home. I am sure that most of us grans did all sorts of jobs to contribute to the family income and to escape being mum for a while.

Just a mention about the £245 to buy a house, here in the south you just might get a studio flat for that, lounge/ bedroom/ kitchen with a separate shower room. It’s so difficult to get on the property ladder. Funny how it varies around the country isn’t it ?

No!

We all, unless millionaires, have to start somewhere and why cannot your son look lower when it comes to the price of a property .At least this will take the load off your shoulders.I would be very very reluctant to take on what son has in mind.

Tell your son to get another extra part/time job on weekends

katy1950

I would say sorry but no we are in a terrible mess after doing something similar our son changed completely when he met his new partner she turned him against all his family and we ended up losing our home so please don't do it

So sorry to hear that Katie, how dreadful for you...???

I would say sorry but no we are in a terrible mess after doing something similar our son changed completely when he met his new partner she turned him against all his family and we ended up losing our home so please don't do it

Message withdrawn at poster's request.

NotSpaghetti

Icanhandthemback is correct. If you move money to him now it will look like a loan and will mean his mortgage offer is likely to be reduced.

We gifted one of our daughters £2,000 at one point when she was about to move, have a new baby and needed a car in the same month... but if was noticed on her bank statement and we had to provide her mortgage company with a signed affidavit to the effect that it was a gift not a loan!
I know it's a good sum for many of us as a gift but in terms of buying a house it's not a great deal!

Good grief, I had no idea ?‍♀️?‍♀️?‍♀️?‍♀️

Icanhandthemback is correct. If you move money to him now it will look like a loan and will mean his mortgage offer is likely to be reduced.

We gifted one of our daughters £2,000 at one point when she was about to move, have a new baby and needed a car in the same month... but if was noticed on her bank statement and we had to provide her mortgage company with a signed affidavit to the effect that it was a gift not a loan!
I know it's a good sum for many of us as a gift but in terms of buying a house it's not a great deal!

I guaranteed my son's mortgage and as soon as he was able to earn enough to qualify for one on his own, he refinanced. We were financially secure to be able to do this. We live in one of the most expensive regions in the U.S., and it is very difficult for young people to purchase a home here and rents are very high. Our thinking was that it is best for him to invest in a home rather than rent.

I wouldn't do it and put my own home and income at risk. If he's a bricky I'm sure he has lots of building mates who could help him renovate a run down property which would probably be in his price range.

Yes BB, that is actually what my son would prefer, a property to do up..... it’s probably more me that wants to get on with it I think he is quite happy to wait...?‍♀️

Thank goodness you’re not doing it Shinamae.
What I would suggest for your son as he needs to stay in that area, is wait for something that needs quite a lot of work on it, or a smaller house with room to extend, as he is a builder.
I’ve helped my family out with house buying but no way would I guarantor or put my home at risk.

No no no

There are many help to buy schemes. I'm not entirely sure how they work but I believe that you basically own half the property and rent the other half. This enables people to buy a property which might be beyond their price range.

MooM00

A bit of a different circumstance here. My Sister agreed to be a guarantor for her Son in law and Daughter for the Sum of a £10,000 loan. This was in early 2018. My Sister lived in a council house and only had a part time job. Things were going smoothly for a few months then in July 2018 my niece was diagnosed at the age of 30 with cancer and died in the November. Her husband couldn’t pay the loan as he was looking after 3 young children my sister was beside herself as she couldn’t pay the loan.Then in March 2019 her Son-in-law had a stroke and died at the age of 31. The loan company still wanted their money back and insisted with lots of letters they still wanted the money back as she was still the guarantor. This made my Sister very ill. She was sadly diagnosed with cancer last June and died in September last year.

So sorry to hear that, what an absolute tragedy...???

Shinamae

I have decided not to do it as I really could not afford to take over his mortgage. I don’t suppose I really thought it through, just a knee-jerk reaction to try and help but all your advice has really helped me reach a decision and my son knows nothing about this so he’s not going to be disappointed anyway...??

Update...

No!

As guarantor, you would be expected to make all his mortgage payments if he's unable to do so. Can you afford to do that and can you guarantee that this will be the case for the forseeable future. If for example your son loses his job, he could be out of work for a considerable time. Personally I wouldn't do it as it's opening up a can of worms and could possible ruin your relationship with your son.

Can’t offer much in the way of advice, except to say do your homework before you take the plunge because, as you say, this is a can of worms. Friends of ours did this for their son and daughter in law who were first time buyers - both of whom lost their jobs within a few months of each other at the beginning of the first 2020 lockdown. They decided there was not much prospect of finding work, as they both worked in hospitality which has suffered badly. Ended up moving in with parents and the house went on the market. Luckily it sold quickly because mum and dad were responsible for the whole amount of monthly mortgage payments until the sale went through.

I think sometimes there’s a tendency to go ahead without proper consideration because it’s friends or family and the perception is that ‘it’ll probably never happen’ but if the pandemic should have taught us one thing, it’s that the unexpected can bite us in the bum without warning, so caution is needed I think. Could you afford to pay the whole monthly mortgage payment if something happened ? Maybe loaning them the money is a better idea, but could you afford to kiss that goodbye if, for some reason they couldn’t pay it back, or had to delay for a long time ?

Several years ago we were asked by good friends to be guarantors for a small loan they intended to pay back over about 5 years. It was from one of those companies who specialise in lending to people with less than brilliant credit histories, and they required security, which our friends didn’t have at the time. The monthly payments weren’t massive, but it would only have taken a moderate change in our finances to make things difficult. After reading through the paperwork and looking at not only the astronomical interest rate, but the penalties for late and missed payments we were horrified and had absolutely no compunction about saying no immediately. It put a strain on the friendship for a while, but not long afterwards they split up and the divorce was made all the more bitter by the fact that they had several loans to divide up and pay back. We were so glad we hadn’t got involved in the end, so don’t be afraid to say no - your son will have to learn to live within his means, so better to start now.

Just an additional thought. We are relatively unusual in the UK in promoting home ownership. Other countries in Europe offer a better range of affordable rental properties, and it is not unusual for younger people of working age to rent their family homes while they wish to have more flexibility and choice where employment is concerned.
People do often save, however; and when they know they are not likely to move again, may buy their own homes at this later stage.

We still think of buying our own homes as the ideal, to give us financial security and the chance to leave something to our children. Yet it is still the case that one in four of us may need residential or nursing care in older age; and, if left on our own, will often be expected to use the equity in the house - which we have vacated and will not be able to return to - to help pay for our care.

There are currently moves afoot to try to alter this, as there have been for decades - as it is considered unfair. Those who have never saved - for whatever reason - may have such care paid for by the state - but the change hasn't happened yet.

A bit of a different circumstance here. My Sister agreed to be a guarantor for her Son in law and Daughter for the Sum of a £10,000 loan. This was in early 2018. My Sister lived in a council house and only had a part time job. Things were going smoothly for a few months then in July 2018 my niece was diagnosed at the age of 30 with cancer and died in the November. Her husband couldn’t pay the loan as he was looking after 3 young children my sister was beside herself as she couldn’t pay the loan.Then in March 2019 her Son-in-law had a stroke and died at the age of 31. The loan company still wanted their money back and insisted with lots of letters they still wanted the money back as she was still the guarantor. This made my Sister very ill. She was sadly diagnosed with cancer last June and died in September last year.

Sad to say, I am adding a resounding no but, there are still some reasonable housing initiatives out there with the government lending the purchaser money to give a better deposit! Whatever you do make sure it’s legally sound to all parties but a kindness, unless you can actually afford to lose whatever money you bestow, can become embittered! I know!! Sadly!