Unsure about being a guarantor

[Dave20]

So DWs niece is 18 and has a baby girl. She lives with her mum, DWs sister.
Now she’s a single mother and doesn’t want to be on the council list, as she thinks it’ll take too long.
She can rent privately, but needs a guarantor. You must earn a certain wage and be a home owner, which we are.
Now DW is all up for doing this because she trusts she will pay her rent and wants to help.
I have my reservations. Firstly, she’s only 18, never had a job, never paid a bill and a bit naive like young people can be.I think she’s too excited about the prospect of having a nice little flat, and is impatient to be on the council list.
DW is adamant that her niece will always pay her rent and is sensible enough to not go down the road of not paying.

However, even if she has every intention of paying, what if she can’t pay? DW just said, well in that case, we’d be notified that’s she’s fell behind on her payments and we would have to come to an arrangement. Her mum, DWs sister said she would pay the costs. DWs sister isn’t a home owner and doesn’t earn enough, she can’t be a guarantor herself.
But is it really risky being a guarantor? We have a mortgage and 3 children, we remortgage ever 2-5 years. Will this effect our applications? We have a long time on our mortgage.
What if her rent goes up? Does her benefits pay for this? I have no idea how benefits work personally.
I can’t really stop DW being a guarantor if she wants to, but we’re linked obviously financially.
Would a guarantor be linked financially to the person? Does it affect mortgage and credit applications? Is it for the duration of a tenancy?
Is it too risky?

I would rather fork out the first 3 months rent tbh. Which in most cases for uni rooms would be £1250 to £1500 GRAND for those 3 months.

Sorry, just £1500, not £1500 grand!

Oops, also meant to say if you paid the first 3 to 6 months rent for them, they can pay you back in stages. Or pay some or most of it back... Whatever you all decide.

@HelloFrostyMorning

I would rather fork out the first 3 months rent tbh. Which in most cases for uni rooms would be £1250 to £1500 GRAND for those 3 months.

Sorry, just £1500, not £1500 grand!

It doesn’t work like that though this is not just about covering the rent that’s on the tenancy agreement it’s about covering the six months it will take to get you out plus the court fees. And the main one is damage which could be a pack of a lot more than 1500 quid. And that’s why they require a guarantor they don’t want the rent upfront it’s just not the same thing

All the replies are right of courses
She’s 18, single. She lives with her mum and other siblings.
A bit crowded, but as others said, she’s an adult. She made choices.
I do emphasis and would love DW or me to help, but it’s a big ask..

Empathy, not emphasis!

It is so so easy to get benefits sanctioned and can take months to appeal - your dn would have no money at all so someone (you) would be liable for her flat.

What if dn hates living alone and moves back in with her mum or a new boyfriend. She could be insisting that she's not living there so doesn't have to pay -landlord says tough luck you signed a tenancy agreement for 6 months/a year - you owe me a year's rent - again you are liable.

Lots of other scenarios.

@Feduprenter But some landlords will let people move in without a guarantor if they pay the first 6 months rent in advance. I have seen it happen quite a few times.

I know there's other stuff to consider, (like damage to property and eviction fees and so on...,) but the fact is that some landlords/landladies will allow a tenancy with no guarantor if the first 6 months rent is paid upfront. Not all, but some.

@Dave20

All the replies are right of courses She’s 18, single. She lives with her mum and other siblings. A bit crowded, but as others said, she’s an adult. She made choices. I do emphasis and would love DW or me to help, but it’s a big ask..

Has your wife changed her mind?

@HelloFrostyMorning Everything you've said is spot on. I wish I'd been as steadfast in my refusal to my ds to be his guarantor, as you were to your daughter. I think he sees me as a soft touch as his dad is seriously mentally ill and I am basically like a single parent at times. He finds it easy to wear me down. It would have saved me a lot of worry. Never again.

Yes, some landlords let you pay a few months upfront rather than have a guarantor. Some landlords will accept guarantors that are not homeowners. There are also agencies which will act as co guarantors with the nieces mother (the agency will sue the mother if the rent isn't paid). There are many other options.

Is there a reason she can’t stay with her mother? Get your wife to talk you through what her plan would be if her niece fails to pay. Would you be able yo end the lease and get her back to her mums without making her homeless? Has your niece or her mum got any savings?

[quote MRSAHILL]@HelloFrostyMorning Everything you've said is spot on. I wish I'd been as steadfast in my refusal to my ds to be his guarantor, as you were to your daughter. I think he sees me as a soft touch as his dad is seriously mentally ill and I am basically like a single parent at times. He finds it easy to wear me down. It would have saved me a lot of worry. Never again. [/quote]
I am sorry to hear that....

I know (as a few people have said,) that some people won't be able to get a place, or the loan they want, without a guarantor. But the fact is that some people just can't - and should NOT be a guarantor. Some people will struggle to pay off 1000s of pounds of someone else's debts. As I said earlier, I don't think this should be a thing... NO-ONE should be asked to be a guarantor IMO. It's such a big ask.

Also, I truly believe that some people think that being a guarantor is like giving a character reference to someone. It's not. As has been said, it's a huge undertaking, and you could end up owing THOUSANDS! (I wonder if the OP's wife thinks this???) Is that possible @Dave20 ??? That your wife believes being a guarantor is just like giving a character reference?

It's worth bearing in mind that guarantors don't necessarily get told that the person they are guaranteeing is running up debt. A friend of mine was a guarantor on a 12 month tenancy, with tenant or landlord able to serve a month's notice after six months. There was no contact at all until ten months down the line she received (a rather threatening) demand for nine months rent with ten days to pay it or face court action.

The landlord hadn't made any contact as the debt was being accumulated, nor had they tried evicting the tenant for the unpaid debt. There was no need for them to really, they had the guarantor to go after.

The only time anyone should ever be a guarantor is if they intend to pay the bills but want to help the person build credit. I know a number of people who have been guarantor on a loan taken out to buy a cheap car for their child at university but who have kept all the loan documents and made the payments themselves. Since they also paid the insurance, the risk was slight.

Other than that, guarantors are needed because the supplier thinks the risk of non payment is too great to rely on the recipient alone. They are transferring that risk to a third party. Don’t be that third party, OP.

Do not under any cirumstances do this. You must explain to your wife the consequences if her niece fails to pay her rent, which seems very likely as she has never worked, that you could lose your own house. Has her niece looked into whether she can even afford to rent a flat or what benefits she will receive. Also private landlords will be very wary of renting to a single mother with no job and on benefits. I hope your wife will read these replies and really understand what being a Guarantor really means.

@cruisecrazy

Do not under any cirumstances do this. You must explain to your wife the consequences if her niece fails to pay her rent, which seems very likely as she has never worked, that you could lose your own house. Has her niece looked into whether she can even afford to rent a flat or what benefits she will receive. Also private landlords will be very wary of renting to a single mother with no job and on benefits. I hope your wife will read these replies and really understand what being a Guarantor really means.

Why would they lose their house?

£750 rent x 12 months is £9,000. Add on a bit for damages and legal costs and if you can't stump up over £10k then your house can be used as security.

Belladonna12

Because the OP has said he could not afford to pay the rent. In which case the worst that could happen would be that the landlord took him to court for the rent and the only way he could pay would be to sell his house.

I love my nieces and nephews and have in the past given them money for things including paying niece £30 a month for 4 years for internet whilst she was at uni and her parents could not afford to help her out, however I would only be a guarantor for 1 of my own children.

Her mum lives in social housing with her three other children. DN is the eldest and obviously has a baby.
They don’t have savings and her mum has a historic bad credit rating.
I’m all for helping family. I’d consider being a guarantor for a mobile phone, even maybe a car. But a property is a big things.
I don’t understand universal credit, or benefits or housing benefits.
If I don’t understand something, it’s foolish to get involved in it. Benefits is a complex system isn’t it?
All because her 18 year old niece has rushed into a decision to go private , because she wants a cosy flat.
I’ve no idea that anyone has properly spoken to her about her affordability. I can’t personally see how a young lone single parent clan rent a property and pay all bills and have enough to buy shopping on.
It’s a big gamble to simple say- let’s give her a chance to see if she can do it.
As someone else said, the world changed very quickly in 2020, to a world none of us have seen before. People lost their livelihoods, their incomes in a short space of time.
I haven’t seen DW today yet as I was at work early but if she still doesn’t respect my concerns, then that’s another matter...

This is on Radio 4 tomorrow. Maybe you could pop this on..

They don’t have savings and her mum has a historic bad credit rating

It gets worse doesn't it?

And no, she probably can't really afford rent, bills and to eat properly as well, but then if you were misguided enough to underwrite her there's every chance she wouldn't bother herself about it

OP please update us when you can. Honestly so worried for you! No offence by DN sounds a little deluded. We've got a baby on the way, it's gonna be a struggle with two of us! She's so selfish to ask you both to do this!

Does bad financial sense run in your wife's family?
We've all made stupid financial decisions (well I have at least) but...

• Your niece already has a safe home
• Has never worked and has a baby
• Just google 'risks of being a guarantor' and loads of horror stories etc pop up.

I hope your household money management isn't done by your wife...

her mother has most likely been the most influential in terms of the niece's financial acumen so this doesn't bode well

Another very valid point, and I wonder just what the chances are that they've both worked out where the "available money" is and tried it on?

Also where's the child's father in this? I expect you'll probably say he's a waster, but even wasters can be persued for money ... have they tried?