Removing guarantor's name from a loan

murphyabu

Morning all,

My girlfriend and I have been in a relationship for 3 years now and we are looking to get set for the future, bigger home, marriage, children etc.

Have spent the last two years addressing her credit situation she has been able to slash her debts right down by a phenomenal amount and will be debt clear in a couple of months.

However while doing our monthly review and checking noddle about 6 months ago I noticed another credit agreement saying she has an unsecured loan for 22k over a 7 year term that started in 2009. It transpires that her OH at that time had bought some property and couldn't complete within the allotted time frame and so needed a loan to secure the property. (Actual specifics not known)

My GF naively signed as a guarantor on the loan. She has not made any payments to date on the loan and it was arranged purely for his benefit. I am not interested in entering a moral debate on his or her actions, he can be very persuasive and clearly his understanding of finance & borrowing needs leave a lot to be desired.

Being fully aware of the need to ensure responsible lending takes place I am cautious that any mortgage applications we now make may take into consideration this loan in case he defaults and cannot make payment

My questions are as follows;

1) Can she get a hold of the original credit agreement despite not being at the same address any longer as he OH (to ensure the nature of her signature joint app/guarantor etc)
2) Is there a way to have her name removed with her OH consent
3) Are there any legal/court systems in place similar to those used in divorce proceedings that we could explore?
4) What impact if any will the loan have on our future mortgage applications (as credit history will reflect him paying the monthly amount)
4) Have you any other advice?

FYI We have engaged him in conversation but he is just dragging his heels claiming either it will have no impact on her credit applications or that he will get round to doing something. To date nothing has been done.

Thanks in advance for your time & assistance.

[Deleted User]

Essentially, the lender believes that the ex won't repay the loan, hence the need for a guarantor. It's not in their interest to lose the guarantor.

If it is showing as a liability on her credit report, then it will likely impact affordability when going for a mortgage.

somethingcorporate

She'd have been taken on as guarantor for a reason, the lender needed additional security to release the loan.

It's very unlikely that the loan company will release her (otherwise where is the guarantee going to come from)? It has nothing to do with the OH, it is the risk of the loan company.

With this in mind the rest of your questions are pretty meaningless - she has signed a contract to agree to guarantee her ex's loan and she'll end up having to do this until the loan is discharged.

The only escape I can see is if her ex can get another loan to pay this one off to discharge her guarantee but given he needed a guarantor loan in the past unless his position has changed significantly it'll be unlikely they will get a guarantor-free loan.

Good luck and well done for helping your partner with her debts.

murphyabu

Thanks for the replies,

Is it unheard of for banks to release the guarantor from the agreement?

Would she be able to request a copy of the original credit agreement to ensure whether she signed as guarantor or joint applicant? The reason for asking the latter is that the loan is shown under "Personal Loans & Mortgages" on noddle and she can't be certain of the terms of the agreement......

ILW

Make little difference whether she signed as guarantor or joint applicant. Liability is the same.

shop-to-drop

Looking on the brightside over halfway through loan term and it does seem to be being paid by the ex. Hopefully he will continue to do so until paid off.

murphyabu

Thanks,

ShoptoDrop yeah that is a positive however for the next few years he will dictate the house we can buy and other credit arrangements we can enter which is extremely frustrating.

somethingcorporate

I think you are misapportioning blame - it was your OH (as an adult) that signed the contract.

murphyabu

somethingcorporate

Where have I tried to lay blame? Where have I claimed my OH was not an adult? Your just speculating now about my intentions behind this post.

I am here asking for other people's advice and experiences of similar circumstances.

As stated in my OP "I am not interested in entering a moral debate on his or her actions". Because to do so would take this post and thread wholly off topic.

What's done is done, i know what a contract is, i know she was an adult at the time of signing. I also know thousands of contracts are broken and renegotiated daily.

I am here to investigate any potential solutions to this particular scenario.

rabbit_burrow

Is he amiable to applying for a loan again to consolidate? Of course, your GF would have to trust him enough to pay off the original loan rather than take on another and end up defaulting.

dealer_wins

There is no hope that the lender will take the guarantor of the agreement.

You stated that your partners ex will dictate what house you can buy for the next 2 years, this is incorrect. Your partner signed the agreement, so its her commitment as a guarantor which is dictating what house you can buy.