Every week, we answer your financial problems or consumer disputes – you can email [email protected] with yours. Our latest problem, available to newsletter subscribers first, is from DeJb, who asks…
Is there an alternative to guarantors for someone wanting to rent? I don’t want to be my brother-in-law’s because my mortgage is due for renewal, but he’s been sleeping on an airbed in my home for nine months after being made homeless and he needs to go.
Megan Harwood-Baynes, cost of living specialist, says…
Hi Dejb. My grandfather would often say the proverb “guests, like fish, begin to smell after three days” – I’m not sure what he would say after nine months.
It’s especially tricky when it is family, so I’m going to first look at what the alternatives are to you being a guarantor and then I’ve got some expert advice on the impact it could have on your mortgage process if you did have to go ahead.
Alternatives to being a guarantor
I’m going to first assume your brother-in-law isn’t a student, because there are some university guarantor schemes available if he is. I’m also going to assume he is not a care leaver, but if this is the case there are also some alternative schemes he may be eligible for.
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You could suggest he pursue a private guarantor scheme (such as Housing Hand or UK Guarantor) – they offer to act as a guarantor for working professionals and students in return for a fee. However, they may also ask for a co-signer, but this doesn’t necessarily have to be you. The difference here is that private guarantor companies don’t usually credit check a co-signer, so someone who may not have been eligible to be a guarantor could be accepted, so he could ask another member of the family.
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You could also suggest he ask the landlord to waive the need for a guarantor by offering a larger deposit, or some months’ rent in advance. This may give them a sense of security and mean they are willing to overlook having a guarantor. The best thing to do would be to speak to the landlord directly to see what they would need to make them comfortable to proceed without a guarantor.
Get him to check with the local council – some offer rent deposit or guarantee schemes. I’d also suggest he reach out to Citizens Advice or a charity like Turn2Us, which could help him find any local grants he may be eligible for.
If he cannot find someone willing to overlook the need for a guarantor, he could pursue some kind of lodger-type agreement, where he would live with a resident landlord. They are often more flexible and don’t require a guarantor.
David Hollingworth, director at L&C Mortgages, has given some insight into the impact it could have on your mortgage application…
It’s always worth considering any potential knock-on impact of being asked to act as a guarantor, whether that is for a family member’s mortgage, another loan or for a rental agreement.
It may seem like a simple thing to sign an agreement to help out a relative that needs to secure a home. However, it could result in a liability and could ultimately see you paying the rent on top of your own commitments.
If that’s the situation and you are already paying the rent then a lender will want to factor that into the affordability calculation. They may pick that up on your bank statements and, as it’s an ongoing commitment, it will put a dent in the amount they may offer on the mortgage.
Some lenders will ask about guarantor arrangements to understand whether there could be a liability in future, even if it’s not incurred currently. That could see them factor the potential need to cover the rent into affordability.
This may not cause a problem, but it’s a good idea to shop around to find the right lender to meet your requirements.
This feature is not intended as financial advice – the aim is to give an overview of the things you should think about. Submit your dilemma or consumer dispute via:
