Mortgage with a Guarantor ... Help

cactusMan_2

Hello all,

Roughly 6 years ago I bought a house with my now ex-wife. Her parents are guarantors. The house has been rented out but is currently vacant. I am in the process of getting a new tenant.

Recently she has been threatening me with walking away from the house, leaving me to pay it. She is in a position whereby she doesn't care about her credit rating due to having another house and being cash based. She said her parents have spoken to their financial advisor and they are safe because the bank will come after me first.

What I need advice on is hopefully straightforward. If she stops paying, what happens next?

What will the bank do to me, the guarantors and the house? I am not in a position to pay for it all myself. Would the bank come after me or go straight to the guarantors? How will it affect my credit rating and will I be black listed?

Thanks in advance for any advice given.

kingstreet

You will accrue mortgage arrears which will be recorded against the borrowers. Eventually, the lender will try to obtain payments from the guarantor if it fails to do so from the borrowers.

Finally, it will repossess the property. The repossession will be recorded against all the parties, borrowers and guarantor.

If there is any shortfall after the sale of the property, the lender can/will chase borrowers and guarantors for upto twelve years.

There is no such thing as blacklisting. If you mean will you have an adverse credit entry on your credit file visible to lenders searching you when you apply for credit, the answer is yes. Your credit prospects will be affected, as a result.

ACG

Is the property in negative equity?

cactusMan_2

There is negative equity of around £2,000, if the house were to sell for what similar houses are listed as.

cactusMan_2

Many thanks kingstreet for the detailed response.

How long will my credit be affected for? I do not mind having bad credit for the next few years as I have no need for credit but in the future, say 3 or 4 years, I would like to get a house. Would something like this stop me getting a house?

Brock_and_Roll

The OPs ex-wife does not care because has another house........she is either misguided or attempting a very poor bluff as the bank will come after her assets including the house! And how will she feel when her parents get the dreaded letter from the bank?

I would play hardball on this - explain that you cannot pay the mortgage on your own and if she walks away, ultimately this will lead to a default and in due course the bank will come after her and her parents.

Brock_and_Roll

cactusMan wrote: »

Many thanks kingstreet for the detailed response.

Would something like this stop me getting a house?

Yes. I guess that is the fear she is playing on.

kingstreet

cactusMan wrote: »

Many thanks kingstreet for the detailed response.

How long will my credit be affected for? I do not mind having bad credit for the next few years as I have no need for credit but in the future, say 3 or 4 years, I would like to get a house. Would something like this stop me getting a house?

Yes. A repossession is about the worst thing you can have on record for a mortgage lender to accept.

Six years will see your credit file clean, but most lenders ask "you you ever" when it comes to repossessions and my not want to lend to you at any time in future.

You'll need a broker when you think you want to look at buying again.

DalePie

cactusMan wrote: »

Many thanks kingstreet for the detailed response.

How long will my credit be affected for? I do not mind having bad credit for the next few years as I have no need for credit but in the future, say 3 or 4 years, I would like to get a house. Would something like this stop me getting a house?

Your credit will likely be affected for 7 years, I'll break it down:

• Your accounts will be defaulted, it will stay on your credit file for 6 years.
• Somewhere down the line, you'll likely recieve a CCJ / Bankruptcy (Unless you agree a plan to pay Back - Another 6 years from that Point)
• You won't have access to credit (To build up your Rating) until at least 5 years in, it will take 1 - 2 years to build up an A1 Rating again.

Although it takes 6 years for stuff to fall off your file. It's essentially from the time the last default was entered to your account that's the date you'll be free. That final default could be 6 months away or even 12 months away - rounding everything up to 7 years!

Take it from someone who had the entire experience (From Debt to repayment to final Repair) it takes way longer than 6 years to stop feeling the effects!

If can at all avoid it don't let the account be defaulted, find a way, ANY WAY YOU CAN, to avoid it. Your life will end up on hold for 6 years if you don't.

ACG

You could sell it and then sue her for half of the outstanding amount?
CCJ her and then get some debt collectors in just to P her off - that will put a smile on your face if nothing else.

Personally I would rather sell and come up with a payment plan for £2-3k shortfall and then go through the courts for her half. Atleast then you are done and dusted and not have to be dealing with her again.

I would be like a dog with a bone just so she hasnt got away with it.

kingstreet

ACG wrote: »

You could sell it and then sue her for half of the outstanding amount?
CCJ her and then get some debt collectors in just to P her off - that will put a smile on your face if nothing else.

Personally I would rather sell and come up with a payment plan for £2-3k shortfall and then go through the courts for her half. Atleast then you are done and dusted and not have to be dealing with her again.

I would be like a dog with a bone just so she hasnt got away with it.

Assuming she is prepared to sign the transfer forms and permit the sale...?