Mortgage Guarantor

Amazon75

Hi all,

A word of warning to all would be guarantors! I was asked by my son and his partner to be the guarantor for their mortgage. I agreed to help him so that he could get onto the property ladder.
Things went well for a start, but a few years later he split from his partner, became out of work and built up arrears. The result of this was to ruin my credit rating. I now cannot get credit anywhere, and have just retired.
The term "guarantor" is confusing, you are in fact responsible for both the payments and any arrears. If the house is repossessed by the Building Society you can lose your house too if there is not enough equity.
Looking back I would certainly not have agreed to it knowing what I do now.

supermassive

Surely you could've helped out your son when you saw that he was spiraling out of control, couldn't you? I mean, nevermind being a guarantor, isn't that just what a parent should do, regardless of child's age?

This probably could've been prevented. What being a guarantor entails is obvious to most. You are a guarantor.

Didn't you think it might've been an idea to help him as the problems began?

"oh you've split from your partner. As I'm the guarantor and creator of your life, perhaps I should double check that you have your finances in order regarding the house that I am partially responsible for as the guarantor"

rather than..

"Well I shouldn't have signed on as the guarantor because it actually means what it means!"

CKhalvashi

Did the words 'guarantor' and 'guarantee' not come together?

Before signing any document, if there's any doubt, it's always best to check it.

If you couldn't afford to guarantee the loan, then it wasn't a good idea to sign the papers to this effect.

meer53

If you can't afford to repay any loan that you're being guarantor for, then you should never agree to it in the first place. There is always the possibility that you may end up paying it, as you have found out. It's not confusing really, it would have been explained in any documents you signed at the time.

Supermassive, thats not a very nice post really. The OP may not have been aware that his son was having financial problems until it was too late. Sometimes, children don't like admitting they can't cope.

Thrugelmir

Amazon75 wrote: »

The term "guarantor" is confusing, you are in fact responsible for both the payments and any arrears. If the house is repossessed by the Building Society you can lose your house too if there is not enough equity.

What did you believe you were underwriting?

DEFINITION OF 'GUARANTOR'
A person who guarantees to pay for someone else's debt if he or she should default on a loan obligation. A guarantor acts as a co-signor of sorts, in that they pledge their own assets or services if a situation arises in which the original debtor cannot perform their obligations.

supermassive

meer53 wrote: »

If you can't afford to repay any loan that you're being guarantor for, then you should never agree to it in the first place. There is always the possibility that you may end up paying it, as you have found out. It's not confusing really, it would have been explained in any documents you signed at the time.

Supermassive, thats not a very nice post really. The OP may not have been aware that his son was having financial problems until it was too late. Sometimes, children don't like admitting they can't cope.

I agree that it's not a nice post, but it's an honest one.

The fact of the matter is that if you're trusting enough of your son to be the guarantor on a mortgage, then you're (probably) close enough to him to know when his marriage/relationship has ended and he's living on his own.

During which time - as a guarantor AND as a parent - you'd be thinking "oh dear, his whole situation has just changed, which means less household income, which means I could end up footing this bill".

I'm sure I'm not on my own when I say that I would've had a talk with him soon after the split to make sure he was able to keep up mortgage payments and keep me out of the financial sewer.

Any parent should have concern for their child when a partner/ex leaves their shared home. It's only common sense to think about others if you created them.

Brock_and_Roll

"The term "guarantor" is confusing"

This surely should be in line for a MSE Forum Oscar !

InsideInsurance

Amazon75 wrote: »

The term "guarantor" is confusing, you are in fact responsible for both the payments and any arrears.

I am curious to know what you thought a "guarantor" did? Did you think you were just being a character reference?

kate87

I do feel for you in a lot of ways because you tried to do a nice thing for your son, and he and your lender should have been more upfront with you if they felt at any point that you didn't understand what you were getting yourself into. But unfortunately you were the one who signed on the dotted line, which in a lot of ways makes what happened more painful, so I’m not here to have a go at you. And I really do hope you manage to get your situation sorted out.

I thought I would comment on this just to give another perspective on guarantor mortgages.
When myself and my other half bought our house I was working part time in my final year of university, and he was working. We accidentally happened upon a lovely house at a bargain price, that we just fell in love with. At this point the market was still recovering from the recession and the credit crunch, and lenders were really cautious.
He applied for the mortgage in his name only, and despite having a good deposit, and having an excellent credit score, a lot of mortgage companies were really unsure about lending due to the size of the mortgage compared to his salary on his own. In the end he went to a broker who suggested a guarantor mortgage, and his dad agreed to be the guarantor, and because of this he got a much more competitive rate than any of the high street banks offered.

My partner and his dad had a lot of discussions about exactly what would happen if we split up, or couldn’t afford the mortgage. They pretty much covered all the bases and had a really open dialogue about what was going on financially and what our outgoings were. I think this is REALLY important! You have to consider the mortgage as if it’s your own, because essentially it is.
Even though on paper based on just my partner’s salary, it would have looked like he would struggle to scrape by with the mortgage, we knew in reality we could afford it easily with my income too, so unless anything drastic happened, it was never really a gamble in that sense. If you’re considering being a guarantor, it’s important to ask yourself why you’re having to do it. If the bank isn’t keen on taking the risk, then why should you be?

I remember reading through the forms for the mortgage, and I know ours seemed pretty clear in spelling out what my partner and his dad were getting themselves into. I seem to remember we also had to pay for his dad to see a solicitor (on his own! without us there!) to talk him through what he was getting himself into, and that was a condition of the mortgage!

My partner’s dad remained a guarantor for two years, until the mortgage deal ended, and due to my partner having a promotion, he was then able to apply for another mortgage on his own.

It all worked out well in the end, me and my partner got married this year, and thanks to his dad we live in a house which we really love. It was just a case of right house, wrong time!

Amazon75

Of course I was aware of my legal obligations when agreeing to be a guarrantor for my son. I have helped him on many occasions, paying off his substantial arrears and keeping us both out of court. His poor financial situation arose after he walked out of two well paid jobs, not very clever for a 38 year old. So Supermassive - I have been "helping" for nearly nine years. I do know what the term Guarrantor means. The point of my post was to warn potential Guarrantors that there is a lot more to it than just being responsible for the loan.
A better solution may be to offer to be a Guarrantor for a fixed period - say 2 years. After that the mortgage is theirs alone.

CLAPTON

Amazon75 wrote: »

Of course I was aware of my legal obligations when agreeing to be a guarrantor for my son. I have helped him on many occasions, paying off his substantial arrears and keeping us both out of court. His poor financial situation arose after he walked out of two well paid jobs, not very clever for a 38 year old. So Supermassive - I have been "helping" for nearly nine years. I do know what the term Guarrantor means. The point of my post was to warn potential Guarrantors that there is a lot more to it than just being responsible for the loan.

it what way is there more to it than guaranteeing to repay the full loan?