Don't bet the farm on houses plummeting everywhere, but don't count on getting any additional equity in the next few years to release that guarantee either.
"We spoke to a finance guy and he told us that it was possible for us to do this if we had my wifes mother go Guarantor and then in a few years if we had some equity in the house the guarantee would be released on the mother in-laws house."
You will need to ensure that you can meet your repayments no matter what happens otherwise your mother-in-law could be in trouble with her house.
Also when building be careful as often things aren't as cheap as they appear, as a few changes here or there will blow out costs.
