First Time Buyers - David and Alison's story

David and Alison want to buy their first house and have found a suitable property valued at £140,000. Both have good jobs and adequate income, however like many young couples starting on the property ladder they don't have a sizable deposit.

undefinedIn fact their savings of several thousand pounds are just enough to cover the purchase and legal costs, plus enough to buy all the essentials required to furnish a first property.

Alison's parents have sizable savings and have considered gifting a deposit. However, knowing that David and Alison can afford the full mortgage amount, they chose to retain their savings and instead give a guarantee for the amount of loan in excess of 75%

Their residential property is valued at £270,000 with a modest £62,000 mortgage outstanding, so they have sufficient equity to support the guarantee, which equates to £35,000. The guarantee is secured on their residential property and they know their liability is capped at the original amount of the guarantee. The maximum guarantee period will be 10 years, with no further claim on the parent's property (it will only remain if the mortgage is in arrears)

How David and Alison's mortgage looks:
Property price value £140,000
Mortgage amount £140,000
Parents (capped) guarantee (secured on their residential property)


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  • First Time Buyer
  • Mortgages
  • Case Study