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?

@Dave20

This is the south east, not London. The points I made to DW were that we’re talking about an open financial agreement, and that the benefits system is complex, and housing benefits are complex. DW said- but she’s never asked for money! FFS- she’s missing the point entirely. I said she may not be able to keep up with her payments, even through no fault of her own, and she could be stuck in a contract with her landlord. Meaning we’d be tied to it. How would we pay for it? Why isn’t DW seeing this ? DE said we needed some financial help from family in the past and she’s like to help - yes but I’ve never asked anyone to be a guarantor, that’s a different thing altogether.

I think you need to be firmer with your DW - easier said than done I know.

You need to say to her, very simply, that if your niece misses a payment at any time for any reason then you are automatically liable and ultimately you can lose everything.

Ask your wife how she plans to pay the rent if your niece defaults. If your wife replies "Oh, but she won't" then she's just being unrealistic and you need to say this.

Asking for financial help is very different to being a guarantor.

Let's say your niece's rent for 6 months is £4000. I'm not privy to your finances but assuming you could somehow manage to scrape that together it's a one-off payment and it's done. The worst thing that can happen is you lose £4000. Would this be some sort of compromise you could offer ?

As a guarantor you can literally lose everything - including the roof over your own heads - if the niece defaults.

I agree with a previous poster; show your wife this thread. Literally nobody has said you should do this - everyone has said not to. Whilst we can't know all your circumstances, we can be objective about this.

Ultimately if your wife presses ahead with this I would do as a previous poster suggested and try to keep your finances separate because I fear your niece is simply going to default. It sounds like her family is not as sensible about money as you and I think the temptation to not pay one month because "Uncle Dave20 can cover it and my baby really needs a new [random unnecessary item] this month" will keep rearing it's head, she'll succumb and then she'll keep doing it because once it's done, there's no reason for her not to do it again.

Surely you would have to declare being a guarantor and this will impact your re mortgage applications

Yes it won’t appear on your credit record but you would need to declare it under credit obligations. As you say you can’t afford the monthly rent so it worked impact your affordability score

Ive no idea how long the term is or the rental cost- I just put £750 as an example, sorry should have said that.
As I understand it, people try to private rent with housing benefit when they don’t or can’t rent with social housing.
I don’t know how housing benefits work or universal credit.
She’s single with a baby. I’ve no idea how much she gets in benefits. Or how much she’d get in housing benefits. Would she really have enough to live on in a flat paid for by the government? ( putting aside the guarantor part).

This has red flags all over it!

I've never been a guarantor but have friends/acquaintances who have and none of them seem to have had a smooth process, there was stress involved and in one case costing them £££

Think very very carefully before entering into this agreement. And then think again!

Another one here saying Don't do it. Please make your DW read this thread.

If DW can't cover the niece's costs then the courts will come after YOU, as you are married. It's not worth the risk, only time it may be worth it is for your own kids – and only then if you're sure they're responsible.

I almost became a guarantor for my bf, when he was moving jobs and homes at the same time. I thought it just meant that I vouched for him, that he was a good person and maybe cover the odd rent while he was looking for work. But when I looked into what it meant, no effing way! He was OK about it, we were both shocked when we found out what it actually meant.

I would not be a guarantor except for my own daughter. Be prepared to pay up if she cannot pay the rent. Can you and your DW realistically afford that? If she and her own mother cannot satisfy the landlord, I can't help but thinking she is spending beyond her means. I would not want to encouraged that nor get involved.

You're wife can't guarantee her niece will be responsible. Noone knows what the future holds...
My friend was a guarantor and was let down she has to make the payments.
I've been asked in the past declined because I'm not willing to take the risk and being a guarantor is a risk. An ex also tried to pressurise me into being one.

In life when making decisions sometimes it's good to think what's the worst that could happen and only go ahead if you can deal with the worst.

I know it sounds negative but it's the reality of what could happen.

I know two people who’ve done it and it’s gone wrong for them.

Basically it’s the landlords way of saying your high risk.

I would only be a guarantor for my DC as they have never let me down and even if they did I would pay to help them
Anyone else including ex DH and ex DP no chance as I couldn’t afford it if they default which is very likely
I’ve been letdown by friends before too which has probably coloured my decision

Another no vote here. Let’s hope your DW is on MN!

DN will promise you the moon if it enables her to have a home for her and her baby. But the reality is, she could default on the rent or cause damage to the property and you will be liable. If she gets into financial trouble, it would be easy for her to scuttle back to her mum's, leaving you to deal with her debt and the enormous family fallout that would undoubtedly follow. I think your DW is being completely naive.

Your wife doesn't earn enough so she can't be a guarantor. You would have to be the guarantor which is a bad idea

The best thing your wife can do is encourage the girl to wait a bit longer.

She will have more points than some because of the baby so she will get a housing association or council property in due course.

It’s the best kind of rental as it has security. Many would bite your hand off for that.

A private let is not the way to go. She just needs to take her “spoiled brat / apple of the mothers eye” attitude and swap it for a reality check.

If your wife really wants to help her she should save up and give the girl the money to do her pad up in due course. Much better idea than guaranteeing payments that could leave you forced to sell your own house to pay any debt for the girl.

Like others have said, don't do it.

I did once for a family member's rent. After a few months, they couldn't pay (genuine as it happened but that doesn't really matter after what happens). As soon as they defaulted, I was next on the hook and had to pay or face proceedings against us both. I paid up and they managed to pick up the payments after three months, but if they had gone on to renew their tenancy, so would my being a guarantor. Without the landlord's permission there would have been no way out of it.

Never again. Not for family or friend.

I agree with your concerns OP. What on earth makes your wife think that a teenager on benefits is not - objectively - a financial risk? It’s a huge risk hence the requirement for a guarantor ie a mug who owns their own home.

Try and get her to wait for a council property or housing association property to come up. With a baby she will get one. The rent will be so much cheaper.

@Elieza

The best thing your wife can do is encourage the girl to wait a bit longer.

She will have more points than some because of the baby so she will get a housing association or council property in due course.

It’s the best kind of rental as it has security. Many would bite your hand off for that.

A private let is not the way to go. She just needs to take her “spoiled brat / apple of the mothers eye” attitude and swap it for a reality check.

If your wife really wants to help her she should save up and give the girl the money to do her pad up in due course. Much better idea than guaranteeing payments that could leave you forced to sell your own house to pay any debt for the girl.

This times one hundred 😁

I forgot to add when I was younger a relative persuaded me to get a joint phone contract with them as it worked out cheaper...they were working. They soon ended up not paying and I had to pay it all...they made me feel uncomfortable and like I couldn't keep asking for the payments as if I was pestering them.

No. Did it once for a friend on car loan. He never paid. Turned out it was in my name. Called to my work to reposess car knew nothing about it. Had it repossed and cost me. They never spoke to me again and i had trouble getting my first mortgage. Never again not even for dcs. Lesson learned.

I worked in social housing for many years and housing allowances can be complex depending on circumstances. If she is privately renting and you're in the south east its quite likely depending on location that her benefits wont cover the entire housing amount. She needs to look at what they would cover, and what kind of property she's looking at. Then she needs to work out the average bills taking into account the energy increases they think we're about to get. There are online calculators that she can use which will show her what she's entitled to.

If it looks difficult on paper it will be 10 x harder in reality, and a guarantor as people have already said is responsible for all the tenants obligations if they fail to meet them. So if she decides to move home with six months left on the lease - who pays? If she damages the property and cant afford the repairs? If she simply cant afford the rent to begin with - these are all things you need to think about. If you don't have the amount of her rent in disposable cash each month and can afford to lose it then its very unwise to be a guarantor.

You can google to find out the maximum housing benefit she'd be entitled to - with a baby she'd be capped at the 1 bedroom rate. She wouldn't qualify for the 2 bed rate.

What your niece needs to do is get herself on the council list. No she wont get handed a council flat whilst she has a secure home with her mother. But the council may offer her a deposit paid and access to a rent guarantor scheme as a means to get her off the council list. If your niece wants to push this angle she may need your SIL to evict her - give her proper written notice etc. But it is doable, and much safer for you than acting as guarantor - and then it is something she has done by herself- independence!

Please don't do it! She clearly has a home. She's comfortable. She's just gonna have to wait for the a council house like many other people before her.

This is a massive risk to you and your family. If she doesn't pay or it does wrong you could lose your home! Tell your DW to wake up and be a mother, because she needs to focus on putting her own kids first!

My biggest fear for this scenario would be,,,,, early in 2020 the world stopped for a very long time, how long do you yourself think you could survive what may be effectively paying two sets of outgoings,
It’s happened once, it could very easily happen again

@Dave20

Ive no idea how long the term is or the rental cost- I just put £750 as an example, sorry should have said that. As I understand it, people try to private rent with housing benefit when they don’t or can’t rent with social housing. I don’t know how housing benefits work or universal credit. She’s single with a baby. I’ve no idea how much she gets in benefits. Or how much she’d get in housing benefits. Would she really have enough to live on in a flat paid for by the government? ( putting aside the guarantor part).

No she won't