When NFL superfan Jacob Barnor, AKA The Football Wanderer, embarked on a dream trip to the USA to watch all 32 NFL teams at their home stadiums in a record 84 days, he knew he would spend the entire amount he’d saved for a house deposit.
Unable to resist his bucket list dream, the Leeds resident decided to swap his plans to get a house and a mortgage and set off to support his sporting heroes on their home turfs instead.
But what about Jacob’s chance of getting a home for himself, now he’s spent the deposit he’d spent years building up?
How easy is it to get a mortgage with no deposit?
Getting a mortgage without a deposit to support your application is never easy, but there are ways you can achieve it.
One consideration may be to use a personal loan as your mortgage deposit. This is a high risk strategy since you’re basically borrowing a bit in order to borrow more. As a result, there are very few lenders who will accept a personal loan, but it is, under the right circumstances, possible.
To make it stick you would have to be in a position of strength when it comes to eligibility and affordability. If you can prove you can afford the mortgage repayments as well as the loan you have to pay back, along with your other bills and outgoings, you may find a lender willing to give you a mortgage.
Could a guarantor mortgage be an option?
If you’re uneasy about borrowing money for a deposit or are unable to do so, you could ask a parent or relative to be a guarantor to help you secure a mortgage.
Jacob’s mother joined him to watch the Baltimore Ravens beat the New England Patriots early in November, so she may be able to offer a good solution.
With the help of his mum, or another close family relative, a guarantor mortgage could mean Jacob can have his world record (watching every one of the 32 NFL teams at home in a record 84 days) and a home of his own.
Guarantor mortgages are a great option for people like Jacob, who are without a deposit or have less than ideal financial circumstances. All you need is a parent or close family member who is in a position to help you.
Some mortgage lenders might, in the right circumstances, offer 100% mortgage deals, as long as your guarantor meets their eligibility requirements. Anyone acting as a guarantor needs to have plenty of equity in their own property, or savings they are happy to deposit and tie up for between 3 to 5 years.
What does a guarantor have to do?
As guarantor, Jacob’s mum would need to use either her own property or savings to secure the mortgage loan.
If she used her property as security, the mortgage lender would hold a charge over it, which, if Jacob missed a mortgage payment, could lead to her home being at risk of repossession. So she might want to make extra sure her son wasn’t planning any more expensive trips before she committed to this idea.
An alternative would be to use some of her savings, and place a lump sum into an account held by the mortgage lender.
The pot held as a deposit would have to be left untouched for up to 5 years, or until Jacob had repaid a certain amount of the mortgage. Although the money held on deposit is not withdrawable, most lenders will usually pay it back with interest.
Who owns the house?
You own the house, but your guarantor will be named on the title deeds.
Your guarantor will not own a share of your property, but they will need to sign a legally binding agreement stating that they will make any mortgage payments if you fall behind.
With the support of a guarantor, The Football Wanderer could have his world record and a home of his own.
If you’re interested in finding out more about getting a guarantor mortgage or a mortgage with no deposit, the experts we work with can help. Make an enquiry for a free, no obligation chat and we’ll connect you to a whole-of-market broker who will help find the right mortgage solution for you.
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