Helping your child to buy a house and not die trying


Despite the sharp correction of housing prices and the greater willingness of banks to grant mortgages when the truth is that future owners need to have saved 20-30% of the final price of the property. Percentages that result in amounts of money that most often are not available to individuals and families who want to buy a house.
To compensate for this lack of financial resources, many financial institutions require a third party to endorse the operation, without the parties concerned, ie mortgaged and guarantors, are fully aware of the implications and risks they are taking to make this decision.
Figure guarantor spread like wildfire in the real estate boom. 100% mortgages and the massive use of the guarantor in granting mortgages allowed practically anyone could buy a house. Parents who supported their children, grandparents who supported their grandchildren or friends who did the same to do a favor for a friend.
A favor that in many cases, became a nightmare, because when the bubble burst and the unemployment rate soared, there were many families who could not afford the mortgage payment and that was when banking it was launched not only against them but also against those who endorsed them to try to recover their money. And that was when most realized what it really meant to act as guarantor. Neither more nor less than respond with all its assets, present or future, of the debt, becoming collateral victims of the evictions and the forgotten of the mortgage system.
"In full real estate euphoria, everyone warranted. The banks demanded guarantees for all operations to the limit. When the crisis broke, many who endorsed lost their homes, resulting in a true social drama, "recalls Luis Javaloyes, CEO of Agency Negotiator.
"Endorse means being willing to pay the full mortgage debt has requested the holder. More associated expenses. Therefore, do not endorse if you do not have enough money to deal with this situation, or all present and future assets risks, "said Pau A. Monserrat, economist finance portal.
¿Guarantor debtor or mortgagor not?
Now, eight years after the crisis, the guarantors are still present in many mortgage contracts. However, it has begun to spread the use of another figure that allows parents, grandparents and friends lend a hand to those who want to buy a house, but limiting their responsibility. This is the no debtor mortgagor mortgaging his own home as a second guarantee of a mortgage loan signing a third. "We've spent years without signing operations guarantors" says Luis Javaloyes, while acknowledging that the figure of no debtor mortgagor "is much more widespread."
"Signature to allow the bank providing the mortgage mortgaging part of its housing, which is provided as a double guarantee. Therefore, there is a single mortgage loan with two guarantees, the house they buy major mortgage holders and not the mortgagor debtor, "says Pau A. Monserrat.
Which option is recommended? "First, to say that the ideal would not have to resort to any of these figures. If you do not have enough money to buy a house, as we should expect. But if we want to buy, it should make it very clear that in case of default on the mortgage, both the guarantor and the debtor does not respond mortgagee against the bank. None of these figures is the holder of the debt, but both respond to it, "explains Cristina Borrallo, lawyer, lawyers and experts portal economists in banking law.
Help limit the risks
"The difference between them is that the mortgagor is not debtor may limit its liability, for example, the first 10,000 euros of the mortgage, so that, once the mortgaged pay those first 10,000 euros, the responsibility of the mortgagee is extinguished no debtor. You can also limit their liability to 50% of the loan, the first 10 years of the mortgage, etc. "adds Borrallo.
Thus, the relative or friend who helps buy the house does not respond or the total debt, or with all present and future assets. Responds percentage of mortgaged his home, and this property placed in double guarantee. Limited risk, but risk, after all.
"Although mortgage is usually a small percentage of the housing mortgagor debtor not, normally exceeding 80% of the purchase value or valuation, the risk of losing this house there. As much as 10%, for example, in the event of default, the bank could call the auction for this amount and not having the mortgagee this money, end up seeing auctioned home "mortgaging. That is, although the responsibility is limited, the risk does not go away 100%.
"The figure of the guarantor reinforces the question of repayment capacity or solvency of the holder, while the mortgagor is not debtor serves to support the issue of LTV, of the security," says Javaloyes who recalls that the guarantor not have to have home ownership, but not the mortgagor debtor, yes.
In the guide iAhorro finance portal, we set an example. One of the most frequent case is that of a couple applying for a mortgage at 100% plus. Currently, the most that usually granted banks is 80% of the valuation, although sometimes give the option of mortgaging another home more to reach 100%, and that is when the mortgage on the house of the mortgagor no debtor occurs.
It would be what is commonly understood as a relative put your property as collateral to cover the missing portion of the mortgage liability as defined above. "This figure in the world of mortgages is much more beneficial than the guarantor for the plays, because if the loan is defaulted, our debt is limited to the mortgaged and nothing else," says Pau Monserrat.
For this expert, before signing anything, "it is necessary to know in depth the legal and practical implications. If we trust what explains the bank or the notary think we brighten the day of signing, we can repent in the future and pay this overconfidence even losing our own home. "
In this sense, Cristina Borrallo recognizes that "the bank is much more interested figure guarantor, although today mortgages with both figures are signed. That itself has to be the future mortgaged to the bank who propose the figure of no debtor mortgagor. If it says nothing, it is likely that the bank proposes to us the figure of the guarantor ".