Could you advise me on guarantor mortgages?

Q I am going through a divorce and my estranged husband has agreed to sign the house over to me. I am unable to afford the mortgage in my sole name but my father is willing to help. My current mortgage lender has approved him as a part owner but does not provide guarantor mortgages.

I am aware that divorce provides an exemption from stamp duty, but would my father be liable to pay? And would he pay capital gains tax on his share when we eventually sell my property? Do the names on the mortgage have to correspond with the names on the deeds? Is it possible to limit my father's share of the house and is this done with the mortgage lender or only for the purposes of the deeds? Also, would this have to be drawn up by a solicitor? Can you give me the names of any lenders that provide guarantor mortgages and finally, do you know if they are usually at higher rates?

BS

A The answer to your first question is that, yes, your father would be liable for stamp duty if he became a joint owner of your home. He would also be liable for capital gains tax on his share of the property when you eventually sell it. However, being liable for a tax doesn't necessarily mean that you will have to pay it if the figures involved are below the tax-free limits (£120,000 for stamp duty and £8,500 for capital gains in the 2005-6 tax year).

It is also the case that the majority of lenders (although not all) do insist that the people named on the mortgage are the same as those named on the title deeds. And yes, according to Ray Boulger of independent mortgage advisers John Charcol, it is possible to limit your father's share in your property. It would be possible for your solicitor to draw up an agreement stating that you and your father own the property in unequal shares as tenants in common with you owning 99% and your father 1%. Having your father owning such a small share would mean that he would probably be able to avoid paying stamp duty and, eventually, capital gains tax.

As far as lenders who provide guarantor mortgages goes, most high-street lenders do, and the fact that your father has no mortgage himself is a big plus. If you want to borrow no more than 75% of the current value of the property, you should also have access to lenders' best rates. It's not the type of mortgage that you take out that makes a difference to the rate you pay, it's the amount you want to borrow in relation to the value of your property.