Mortgage Guarantor

jetplane

Hi
Can a person who has a joint mortgage have the joint person removed and arrange for a guarantor to enable them to keep the home and pay the mortgage? (With consent of course.)

My cousin has been seperated from her partner for around 4 months, her ex has been paying half the mortgage on their home which is on a joint mortgage and is in negative equity. There are no children involved.

My cousin has been living in the home and paying all of the other bills. Her ex has decided that he can not afford to keep paying his share as well as rental costs elsewhere and wants the house to be sold. My cousin has offered to pay all of the mortgage if he doesn't force a sale, but will need his name left on it as the bank would not grant her a mortgage for the full amount.

The way I see it is that the house could take a long time to sell and they will both be left with a large debt (at least £30,000 joint) and no house. If he signs the mortgage over to her, he will still have no house but won't have the extra debt, as he already has quite a lot.

My cousin is terrified of losing her home and is willing to take this mortgage on but can't see how she can get the bank to agree.

Any ideas would be appreciated. Thanks

kingstreet

I've never known a lender accept a guarantor in such circumstances. They will release one of the current borrowers if the remaining borrower has the income to justify the mortgage alone, or they may agree to another borrower replacing the one being removed.

I can't see anyone willing to take on this commitment with a £30k negative equity bill potentially attached.

If the ex is removed, he will be removed from both mortgage and deeds and gets to walk way from his liability for the negative equity.

Is this sensible?

Thrugelmir

Is your guarantor happy to underwrite £30k of negative equity?

Unfortunately you may well have to face selling up. Or continue paying the mortgage yourself for a long long time (whilst your ex remains on the mortgage). At least until the negative equity is discharged. Not a satisfactory solution but at least the liability will reduce while the mortgage is paid.

Longer term a solution will have to be found.

jetplane

Thank you both. (I am asking for a third party though, it is not my own situation)

No I don't think that it is a sensible option to take on the debt or let her ex go scott free but she is desperate to keep the house and can't see how she can buy another property once this one sells as she would have no deposit and a large debt.

She is prepared to pay the mortgage long term with him remaining on the mortgage, but her ex does not seem willing to do this indefinately and is pushing to sell.

On paper she does not earn enough to apply for the full mortgage but in practice she has very good money management skills and can actually afford to meet the payments.

I think she is wanting to approach a family member to use as guarantor and they will be fully aware of the negative equity. I think this was a last resort.

RenovationMan

Better to sell up and only be liable for £15k's worth of negative equity than to stay put and be liable for £30k.

jetplane

But I think she will be jointly liable for the whole £30,000 so if he doesn't pay it she will have to anyway. And thats just on the valuation price, if the house sells for less then the debt will be more.

I don't actually understand his insistance on selling. He has the option of

(i) not selling, not paying anything towards the house and not increasing his current debt or outgoings. or

(ii) selling and increasing his debt and increasing his outgoings to repay this debt. (in which case he might as well not sell and pay something towards paying the mortgage off as is his current position)

It is my cousin who has come up with this get out of jail free card for him.

RenovationMan

jetplane wrote: »

But I think she will be jointly liable for the whole £30,000 so if he doesn't pay it she will have to anyway. And thats just on the valuation price, if the house sells for less then the debt will be more.

Not if the condition of the sale is that he pays half of any shortfall, and that could be written into a binding contract by a solicitor. Once an offer on the house has been accepted, they will know what the shortfall is and loans can be arranged for both of them and deposited with the solicitor. The sale can then go through and all monies paid. They will then both walk away with separate loans in their own names and without any joint liability.

I would imagine that the mortgage company would stipulate that the negative equity money is in place before the sale goes through anyway. If the ex doesn't want to front up the cash then the sale doesn't have to go through.

jetplane

Ooh thanks I never thought about them having to pay the negative equity off at the point of sale. Dumb I know, I just assumed that they would owe the bank. And I didn't know about them being able to split the loan.

Ultimately I think if my cousin can delay or prevent the sale then she will do this. I have told her to go to speak to the mortgage provider but she desn't want to alert them to any potential problems until she has no choice.

Thrugelmir

RenovationMan wrote: »

I would imagine that the mortgage company would stipulate that the negative equity money is in place before the sale goes through anyway.

If the solicitor doesn't have the funds in hand to discharge the mortgage then completion can't take place.