subject: Guarantor Loans and the Bank of Mum and Dad [print this page] In today's market getting help from parents is getting more and more common. Be this for help in tuition fees, buying a car, or simply not moving out of the family home until the mid 20s.
A survey showed that the average age for leaving the family home has raised by 6 years over the last 20 years. House prices, lack of mortgage availability for first time buyers have all contributed to making this worse.
A new concept is an alternative to this. By guaranteeing a loan for a son or daughter a parent can help them to cut the apron strings keeping them at home.
These so called Guarantor Loans are Typically loans up to 3000 and would be enough for a young person to put a deposit down on a rental property and have some money spare for moving in costs.
Other alternatives for borrowing money today are payday loans, log books loans or other doorstep type of lending at high APRs, therefore this may be a solution that is affordable as well.
The guarantor loan concept is similar to the established rental guarantor concept which is commonly used in letting, but delivers a lump sum to the applicant which has obvious advantages.
Guarantor mortgages are also becoming more and more popular with the likes of Australia leading the way. With a similar principle, using a guarantor to guarantee the mortgage repayments.
This is a more viable option for those parents wishing to offer the children the financial assistance they need but do not have the capital to lend themselves.
Guarantor Loans and the Bank of Mum and Dad
By: Jon Miller
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