Guarantor for a morgage.?

Question

My father owns his home (morgage paid off) if he was my guarantor would the bank give me a morgage with no depoist?
How do banks work out how much they will lend? I am a fisrt time buyer. Thanks.

Answer 1

Really different Banks and lending institutions have different lending criteria, but in general this is what they look for.
First, the value of the property has to be more than what they will lend, so if they had to foreclose they could get their money back, this is why in general you will need some sort of a deposit, it may be anywhere between 5-30%.
Secondly they want to make sure that your income is sufficient to cover the monthly payments. If your income is not sufficient they will look at a guarantor and have to get some sort of income verification there.
Thirdly, your credit rating.
The bottom line is you will pay for the amount of risk a bank or a company is willing to take, if you have a down payment, can verify income and a good credit rating then you will get a good rate. If you don't have all of these you might be able to get a mortgage but the terms will be more costly.

Answer 2

To get a conventional mortgage with a good rate, you have to have a 20% down payment. To buy with no money down, in the US, you would have to get a FHA loan and buy mortgage insurance. They will add significantly to the closing costs that you must pay at the time of closing.
If your father is a guantor, a mortgage company would be more likely to lend the money, if you qualify for the mortgage.