First Time Buyer - Susan's story

Susan wants to buy her first property and has found a flat close to where she works valued at £100,000. Having spent several years repaying her student loan she only has modest savings, which after taking account of the costs of buying the property, leaves enough for a £3,000 deposit. She can afford a £97,000 mortgage to make up the remainder of the purchase price.

undefinedSusan's parents aren't able to gift a deposit, but have a mortgage free property so choose to give a guarantee for the amount of loan in excess of 75%, in this case for £22,000 on their residential property.

Their residential property is valued at £180,000 and they know that their total liability cannot exceed £22,000, equal to just 12% of their residential property value.

The maximum guarantee period will be 10 years, at which point the guarantee will expire with no further claim on the parents' property (it will only remain if the mortgage is in arrears).

How Susan's mortgage looks:
Property price value £100,000
Mortgage amount £97,000
Parents (capped) guarantee (secured on their residential property)

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  • First Time Buyer
  • Mortgages
  • Case Study