GRADUATE MORTGAGES

from family members or relatives. The guarantor(s) can either take full liability where they are accountable for the whole mortgage payments or limited liability whereby they are only accountable for the borrowers shortfall which is the difference between what the lender has calculated the borrower can afford and the actual sum required (up to a maximum of a 30% guarantee from the guarantor)

As a ‘first time buyer’, the applicant will be eligible for exemption of Stamp Duty to £250,000.

When taking out a graduate mortgage, most graduates tend to opt for an interest only mortgage during the first 2-5 years in order to keep their monthly payments as low as possible. After this time it is common to then take out a repayment mortgage whereby the outstanding mortgage balance is repaid gradually over the term of the mortgage, together with interest on the money borrowed.

Advantages

• Enabling a foot on the property ladder at an early age
• Depending on the right market, this could be a valuable investment in early life if property prices appreciate.
• If using a guarantor, a higher mortgage advance may be available to you as a result of the guarantor’s income, which may enable the purchase of a more desirable property

Disadvantages

• Your financial situation / job prospects may not improve depending on personal or economic conditions
• If using a guarantor, financial or personal circumstances between each party may change over the term of the mortgage
• If using a guarantor, it may be difficult for them to be released from the mortgage contract unless an acceptable replacement can be found or the main mortgage holder’s salary or value of the property has increased significantly.