There’s something really exciting about buying your first home. Taking that first step can be very rewarding, and becoming a homeowner can give you a huge sense of achievement and pride.
Looking for the right property can be fun, but it’s understandable if you find it a little daunting too. After all, getting your first home can also mean arranging your first mortgage. It’s a big financial decision, but it needn’t be a complicated one. At the Scottish, we do all we can to make the whole process as easy and stress-free as possible for you.
We’ve been helping people in Scotland buy their homes since 1848. And, as a mutual building society, we’re committed to giving all our customers a more personalised service, which includes a range of specialist mortgages to help you buy your home. It means we’re one of the few companies to offer Guarantor Mortgages.
5 great reasons to choose a Guarantor Mortgage from Scottish Building Society
Key features of Mortgages for First Time Buyers:
Prospective borrowers looking to get on the property ladder but require some parental support.
The society will consider guarantor mortgages in certain circumstances noted below:
- The applicant(s) and guarantor(s) will be required to meet the Society's documentation and underwriting requirements in respect of the guarantee.
- The Society is prepared to consider up to a maximum of 90% loan to value.
- The title to the property must be in the name of the borrower(s)
- In addition to the guarantee the Society will obtain Mortgage Indemnity Guarantee Insurance for any borrowing in excess of 80% loan to value. •
- The applicant must be purchasing the property for their own main residence (re-mortgages are not available) and may be:
- Working child (current earnings expected to rise over time and will meet affordability requirements in the future)
- Non-working child (includes those in full time education)
- Residing spouse whereby setting up the mortgage on a guarantor basis is a means of protecting the marital home against 'unlimited liability' for self- employed applicants
Mortgages are available for owner occupied residential properties. All mortgages are subject to a suitable property valuation. Minimum valuation £60,000.
We will lend up to a maximum of 90% of the property valuation or purchase price (whichever is lower). The maximum loan size is £300,000 and the minimum loan size is £50,000.
Normal maximum is to age 85 but it will be necessary for the guarantor(s) to demonstrate the necessary level of sustainable income for the term of the mortgage e.g. the Society will check the guarantor can service the loan into retirement if the proposed term runs past the guarantors normal retirement age.
How much can I borrow?
All applications are treated on an individual basis and based on affordability. The maximum we will lend is generally determined by income (which can include pension).
Any existing financial commitments will also be taken into consideration when affordability is calculated.
Where the borrower is a 'working child' affordability must be shown from the income of the borrower and the monthly support from the guarantor.
Where the borrower is a 'non-working child' affordability must be demonstrated by the guarantor for all commitments and household expenses for both the borrower(s) and the guarantor(s).
In the case of 'residing spouse' affordability is to be assessed using the earning of the guarantor.
As a guide we will lend up to:
- Main income x 4, PLUS second income x 1 OR
- Joint income x 3.
For loans over 80% of the property valuation or purchase price (whichever is lower) we will lend up to:
- Main income x 3.5, plus second income x1 OR
- Joint income x 2.75
We would expect both parents who reside together to act as guarantors for their child.
The parent(s) acting as guarantor must not be older than 65 at the time of the application.
The main guarantor must have a minimum sustainable income of £30,000 per annum.
The guarantor(s) must be property owners and have their main residence in the UK.
Types of Guarantee:
There are two types of guarantee:-
- Full Guarantee provided for the full sum of the mortgage or
- Limited Guarantee- restricted to the portion of the loan over 70% loan to value. This normally applies where the guarantee is for a working child where the parent is providing monthly support.
Interest Rate options:
Please see our interest rate information pages for full details.
This product is not available for a remortgage.
Security for any mortgage granted will be as follows:
- A first charge will be taken over the property being purchased as security for the mortgage lending.
- Parental Letter of Support for monthly payments - required to support any borrowing above normal affordability on the applicants own income.
- Parental Guarantee from the parent(s) acting as guarantor for borrowing in excess of 70% of the property value or purchase price (whichever is lower).
- Please note the guarantee could be for a limited amount or to over the full mortgage. It is a requirement that the guarantor takes independent legal advice to ensure they fully understand the legal obligation of providing a guarantee.
It is a requirement that the guarantor takes independent legal advice to ensure they fully understand the legal obligation of providing a guarantee.
Higher Lending Charge:
Where a Higher Lending Charge is applicable this can generally be added to the mortgage if you wish providing total lending does not exceed 95% This charge is based on the amount being borrowed and full details of the charge can be obtained from our mortgage advisers.
You may make overpayments on your mortgage to reduce the capital. If this is during the initial period where Early Repayment Charges apply you may repay up to 10% of the capital balance of the mortgage each year without penalty.
Once any period where Early Repayment Charges are applicable has elapsed, you may make capital reductions without limit or penalty to reduce the balance of the mortgage.
Buildings Insurance must be arranged prior to funds being released. Our advisers can provide competitive quotations for buildings insurance and also life cover.
You are not required to arrange these or any other insurances through Scottish Building Society.
To find out more about our Guarantor Mortgage pop into your local office to talk to one of our specialist mortgage advisers or call 0345 600 4085.
For full details of all interest rate options currently available please see our interest rate information pages. Our specialist mortgage advisers can guide you through the application process and help make everything as smooth as possible.