Mortgage with a guarantor
A loan with a real estate guarantor is the solution if you lack the equity needed to purchase a home. When you use your home as collateral for another person’s loan, this is called real estate guarantee.
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Loans with a real estate guarantor
A loan with a real estate guarantor is the solution if you lack the equity needed to purchase a home. When you use your home as collateral for another person’s loan, this is called real estate guarantee.
It is also worth noting that the guarantor’s own debt must not exceed five times their gross annual income, including the debt for which they are acting as guarantor.
How much can you borrow with a real estate guarantor?
When applying for a loan in general, there are several factors the bank will consider in determining how much you can borrow. One of the most important factors is the borrower’s financial situation, particularly income and debt.
A general rule is that your total debt cannot exceed five times your annual income. This means you must subtract all existing debt when calculating how much you can borrow.
This includes personal loans, student loans, car loans and credit card debt, when 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 the borrower will still be able to make loan payments even if interest rates were to rise.
If you meet these criteria, you can apply for a mortgage with a guarantor. If your debt exceeds five times your gross income, you must have a co-borrower. It is possible to be both a guarantor and a co-borrower.
Example of a Loan with a Guarantor
Example: – Purchase price of a freehold apartment is 4 million
. Closing costs will be approximately 110,000, and the total amount needed to purchase the apartment is 4,110,000.
You can borrow up to 90% of the purchase price (excluding closing costs), secured by this apartment. That amounts to 3.6 million.
So you need to have 510,000 in equity.
If you don’t have that much saved up, you can borrow this amount by using another property as collateral.
Summary of Real Estate Security:
→ When applying for a mortgage, you are usually required to have at least 10% equity plus funds to cover closing costs.
→ If it is an apartment with shared debt, this debt must also be included in the calculation of equity.
→ If you do not have sufficient equity in your account, a real estate guarantor may be an option.
→ The co-signer becomes personally liable for repaying the loan if the borrower is unable to do so. Banks must therefore also take into account the co-signer’s financial situation and whether he or she can handle the additional debt should that situation arise.
A person receiving a low minimum pension is therefore not a viable collateral provider for the bank. Doing so risks putting someone with a precarious financial situation in a difficult position.
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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 fast case management
With us, you will be assigned a dedicated advisor who will help you every step of the way. After
a pleasant conversation with you, we map out your financial situation.