Mortgage guarantor

We have just offered this to our daughter who is currently renting.
She is always in work, super diligent, but generally on 1 year - 3 year contracts. She ended one contract 31st December and already has one set up for next week.
Property in the area where she wants to live is cheap. There is no reason for us not to do this as she is 100% reliable and would be happy to sell if she suddenly became unable to work.

I know plenty of people I would not offer this to! Only you know your daughter but this was entirely our idea. It is much harder to get a mortgage on short-term contracts. She is "thinking about it".

If your daughter is 100% reliable I'd look at it. Otherwise I might offer a loan of what I could afford. It would have to be money I could afford to lose.

We were asked in slightly different circumstances. When our son was at university, in London, he shared a house with six other people, in Kensington. The house was worth around 1.5 million then. We were happy to guarantee his rent for his room only, but not all the rents, for the whole house. The maximum we could have been asked for in rent was £20,000. That was before taking into account...anything else happening in the house, from the tenants, their visitors etc.
Guaranteeing is open ended. You need to work out the worst possible scenario, and ask yourself if you could afford it. Needless to say, our son didn’t live there. He actually moved home and travelled in for lectures. Most of his work was done at home. He saved £8,000 doing this.
I personally would never do it. If she can’t live with you in a house with ample space, then she shouldn’t be asking for your help.

I think you should take professional advice. It can be risky.

When my children were young and needed guarantors for the rent in shared houses, I did agree to this. It is not quite so permanent as when a house has been bought because you can leave rented accommodation and go somewhere cheaper slightly easier etc. etc.

However, I made it clear to them that I expected them to make every effort before things went pear shaped and I knew that, if push came to shove, I could afford their rent payments.

I think, in your circumstances, you should be very careful.

Wrong of your DD to ask you , I’m sure she knows your financial situation.

Unless you can honestly say that you can afford Her Mortgage Payments, plus all of her other outgoing Bills for an unlimited period , assuming that if she defaults she would have to sell up, possibly at a loss, could you afford to pay the difference in what she owes and what she gets from the sale? Plus all of your own bills, then it surely has to be No.

Odd that she can’t live with you but is potentially happy to wreck your life financially!

I think it depends on how reliable your DD is. It also depends on how much savings you have. Could you have an agreement with your DD that if she ends up not bring able to pay the mortgage you would pay for a set period of time eg 6 months and then the house would have to be sold. A home for your DD and your GC especially if she has become single recently is high on the list of priorities. Is your DD a good manager of money on the whole?

I have acted as guarantor for my adult children when they were renting houses in their early twenties but I was aware that I would be responsible for the rent if they did not pay and could afford to make payments for a short period of time. I trusted them but knew that if they lost their job, I would help out with rent even without being guarantor. Luckily when they bought a property, I was not needed as guarantor for their mortgages.

If you cannot afford to pay the rent or mortgage in the event that your daughter does not keep up the payments, then you should not be guarantor - having said that, it would be very difficult to refuse!

OP your house will be at risk if your daughter defaults and who can say they will never get ill or have an accident preventing them from working
I would never do it for my DC I would give them a deposit if I had the money but not guarantee a mortgage I could not afford to pay myself

I know someone who did this for a family member (not a DC). They defaulted and the guarantor couldn't afford to make the payments. Ultimately the guarantor lost his own home. I sure it was the major factor in his marriage break up because he didn't tell his wife about the arrangement.

I refused to be a guarantor for an adult DC. They had to stay in rented accommodation and weren't happy. I did promise that they could move into our family home if things became too much. Fortunately we do have enough space to take a family in. They didn't have to take our offer up and are now doing ok.

Could DD move in with you or downsize? Could you give her a loan to tide her over, or help with child care so she can work more hours?

Certainly take legal advice. It is very difficult to see them struggle.

Thank you for your replies. I have some savings which at the moment are supplementing my NHS pension until I get state pension next year. I own my house which at some time I had thought of downsizing as on my own is a big place.
She has tried reassuring me that she would never default but then you never know what is going to go wrong in the future.
I'm worrying about it and feeling pressurised emotionally because of the impact on the 2 grandchildren of losing the family home. But also feel young children are resilient and adapt well to changes.
I had suggested that she and the kids move in with me and I would adapt the house for them but she said she could never live with me.

Can you easily afford to pay her mortgage if things go wrong
Do you personally have the income to cover this or put your own home as security if she defaults
Not a step I would take lightly I have done it when my children were renting but this is a much bigger commitment
I also suggest you get professional advice

What exactly are you signing up for? Can you afford to bail her out if things go pear shaped? What if a new partner moves in?
I suggest you get professional advice as to what this entails for you.