Mortgage with guarantor
A loan with a real estate guarantor is the solution if you lack the equity to buy a home. When you provide property as collateral for another person’s loan, this is called collateral security.
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Loan with real guarantee
A loan with a real estate guarantor is the solution if you lack the equity to buy a home. When you provide property as collateral for another person’s loan, this is called collateral security.
It is also worth noting that the guarantor may not have more debt themselves than a maximum of 5 times their gross annual income , including the debt for which they are acting as guarantor.
How much can you borrow with a guarantor?
When applying for a loan in general, there are several factors that the bank will consider for how much you can borrow. One of the most important factors is the borrower’s finances, and in particular income and debt.
A common rule is that you cannot have a total debt that is more than five times your own annual income. This means that all existing debt must be deducted when calculating how much you can borrow.
This includes consumer loans, student loans, car loans and credit card debtwhen calculating how much you can borrow.
In addition, the borrower’s finances must be able to withstand an interest rate increase of at least three percent and/or an interest rate of at least 7 percent. This is to ensure that you will still be able to service the loan, even if the interest rate increases.
If you meet these criteria, you can apply for a mortgage with a guarantor. If the debt exceeds 5 times gross income, you must have a co-borrower. It is possible to be both a real estate surety and co-borrower.
Example of loan with guarantor
Example: – purchase price freehold apartment for 4 million
Costs will be about 110,000 and the total amount you need to buy is 4,110,000.
You can borrow a maximum of 90% of the purchase price (excluding costs) that is secured in this apartment. This corresponds to 3.6 million.
This means that you must have 510,000 in equity.
If you don’t have that much saved up, this amount can be borrowed if the amount is secured in another property.
Summary of real estate acquisition:
→ There is usually a requirement for at least 10% equity + money for costs when taking out a mortgage.
→ If there is an apartment with joint debt, this debt must also be included in the calculation of equity.
→ If you don’t have sufficient equity in your account, a real estate guarantor may be an alternative.
→ The de facto guarantor becomes personally responsible for repaying the loan if the borrower is unable to do so. Banks must therefore also take into account the financial situation of the collateral taker and their ability to withstand additional debt if this happens.
A minimum pensioner with a low pension is therefore not a relevant guarantor for the bank. Then you risk putting a person with weak finances in a bad situation.
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This is how we help you:
Fill in the application form
It only takes a few minutes and is completely
free and non-binding for you.
We talk to the banks
Your advisor will talk to our partners and find the
best solution for you.
Receive a non-binding offer
Once we've landed the solution we
most believe in, we'll contact you for a
no-obligation quote.
Free and quick case management
With us, you will be assigned a permanent advisor who will help you throughout. After
a pleasant conversation with you, we map your financial situation.