Guarantor on a mortgage

Mackem1000

Hi all, I’m not sure if this is the correct place. 

One of my family members is going through a divorce. She has a special needs son and needs to stay in the family home for various reasons.

Her ex just wants his name off the mortgage, nothing else. Seems fine, but she’s self employed and would struggle to get a mortgage on her own. She can afford the payments, but she doesn’t know if her mortgage company would allow her to take on the payments on her own. 

She needs to speak to them essentially. 

But she was suggesting maybe with a guarantor it might make it easier for her. This is a big financial commitment. But there’s a question I can’t find the answer to online, and that is what happens to the home / payments if the borrower passes away. Is the guarantor then responsible or does the legal agreement end? Or actually Is this something that can be discussed or agreed with the mortgage company re terms of the agreement?

I know we need legal advice and it’s all just currently ifs and buts but just curious if anyone has any experience.

Thank you 

jimjames

The person would need to make sure that they have adequate life cover in place, otherwise the guarantor would be on the hook until the property is sold.

MWT

In the event of her demise, the mortgage liability passes to her estate, and is managed by the Executors of her estate, but you remain as a guarantor to the mortgage. Often the home would need to be sold to repay the mortgage, if the estate lacked the funds repay it.

It would be prudent to talk to her about life insurance sufficient to repay the mortgage and a note in her will that the proceeds of the life insurance are to be used to indemnify you as guarantor and to repay the mortgage.

Alternatively you could insure her life yourself, since you have a demonstrable insurable interest due to the mortgage you are guaranteeing.

Mackem1000

Ok thank you both, that’s very helpful,
Much appreciated 

DullGreyGuy

MWT said:

It would be prudent to talk to her about life insurance sufficient to repay the mortgage and a note in her will that the proceeds of the life insurance are to be used to indemnify you as guarantor and to repay the mortgage.

Alternatively you could insure her life yourself, since you have a demonstrable insurable interest due to the mortgage you are guaranteeing.

It would be much more prudent for the second option given that the will or life insurance beneficiaries could subsequently be changed without the guarantor's knowledge.