Mortgage with guarantor
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 a home as collateral for another person’s loan, this is called security deposit. The guarantor must not have more debt himself than a maximum of 5 times gross annual income including the debt for which he is to be guaranteed.
How much can I borrow with a surety?
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 total debt that is more than five times your 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 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 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.
There is usually a requirement of 15 percent equity.
If it is an apartment with joint debt, this debt must also be taken into account in the calculation of the equity.
If you do not have sufficient equity in your account, a real estate surety can be an alternative. A real estate surety is a person who provides security in their home for the loan. The surety becomes personally responsible for repaying the loan if the borrower fails to do so. The banks must therefore also take into account the surety’s finances and that he/she can bear extra debt if that 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.
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 85% of the purchase price (excl. costs) secured by this apartment. This corresponds to SEK 3.4 million.
In other words, you must have 710,000 in equity.
If you don’t have that much saved up, this amount can be borrowed if it is secured by another property within 85%.