AIBU to consider being a mortgage guarantor?

[Idontneedrescuing]

My sister is breaking up with her partner and wants to remortgage only in her name - she can afford the current bills and mortgages repayments but he concerned there are potentially some affordability issues on paper in the current economic climate so I am wondering how I might help if needed. AIBU to consider this - if I was a guarantor, I don’t how / whether this might affect mine and my partners mortgage situation when I need to remortgage or move house? (I own properties already with my husband so going on a joint mortgage wouldn’t work as it would have tax implications for the purchase)

Also does anyone know which banks offer guarantor mortgages, if any? She’s obv not a first time buyer

Thanks, hoping for some traffic here!

Could you afford to pay back the whole debt if she defaulted? And would you be willing to risk that? Because that's what you'd be risking 🤷‍♀️. I'd never, ever act as guarantor for anyone. No exceptions!

My dad guaranteed mine in 2006. It does (or did when we did it) affect future borrowing.

Yes it can and probably will affect you. Don't do it. It's never a good idea.

It will definitely effect your ability to remortgage.

Definitely don't do it.

I could afford her monthly repayments if needed, it’s a relatively low amount and she’s very reliable in any case. I know it’s sound mad written down but I just really want her to be able to keep her place.

I'd be exceptionally wary and ensure you have all the information first
This link looks helpful

www.moneysupermarket.com/mortgages/guarantor-mortgages/?cicp1=&source=GOO-0X00000305D71EE5CC&mckv=st434UHKP|dm_pcrid_252227355272_mtype_b_kword__2764ri918980_slid__pgrid_53016387578_ptaid_dsa-407322697630&uuid=11111111-1111-1111-1111-111111111111&Device=m&engine=google&gclid=Cj0KCQjwl6LoBRDqARIsABllMSYc03W6yEDbFI4Esg5NM3yR7kk_ws04_icAsth3Vlup6B2VVdYLynEaAsWUEALw_wcB

Hmmmm very much worth reading. That's frightening... The potential consequences for you on more than one default

I wouldn't as it may prevent you from getting a mortgage or loan in the future.

Thanks @Hippychick78 will take a look!

Please don't. You're putting your own financial security at HUGE risk.

Which are great, objective also, x very simply written

www.which.co.uk/money/mortgages-and-property/mortgages/types-of-mortgage/guarantor-mortgages-a3x5g1h6fw2x

I used to work in arrears support for an Irish bank’s mortgage department. Loads of parents were guarantors for theirs kid’s mortgages as everyone was panicking about getting on the ladder pre-2008 financial crash.

One day a chap rang through having got a letter with reference to his daughter’s mortgage which he had guaranteed a decade earlier, thinking it must have been a mistake. I had to break it to the poor bugger that the €150k arrears balance was definitely not a mistake, and the bank was now persuing him for the debt.

I would never ever act as a guarantor.

You would be bonkers to do that op

I would never act as a guarantor, far too risky

Thanks for the guides

For those of you saying it’s crazy, is there any basis other than the risk the person won’t pay and then it is secured on my property? Just wanting to gather info re the other risks.

Speaking to an advisor in any case and appreciate people’s responses.

YABVU! Seems a lovely idea but you stand to be liable if she can't pay. It also affects what you can do if you want to move. I'd never do this unless i could afford to pay off the debt in full.

No, don’t do it. Never mix family and money, recipe for disaster. You can always help her out if things get tough but don’t get legally obliged to pay, no way. You presumably have your own kids to look after, they are your responsibility not your sister.

You would be putting yourself at an enormous risk.

If your sister has a change in her circumstances and can no longer afford to pay you will be responsible instead for the full balance. You have assets in the form of property of your own to protect and you would need to reflect affordability to cover your own property and the mortgage you are guaranteeing when remortgaging.

Potentially this could affect you financially for years as she may on paper not be able to finance in her own right and remove you as guarantor.

You would need to seek legal advice anyway as part of any guarantor mortgage.

We got a springboard mortgage, so my Parents are guarantors but only to the tune of 10% of the mortgage. It was a lot of effort for them, they had to have legal advice and the solicitor grilled them on what would happen if DH and I split up, and sign to say they understood they could lose all the money.

It is said that every Victorian father gave his son the same advice "Never back a friend's bill". It's as true today as it was then.

You should get proper legal advice before taking on a burden like this! It's a Pandora's Box full of nasty surprises!

My sister asked me a few months ago and I said no (after a lot of thought)

My priority are my children, how would I live with myself if I became responsible for her debt and lost the roof over my children’s heads to resolve it? It doesn’t just come down to whether that person is trustworthy, what if she becomes unable to work, becomes critically unwell etc. It will fall to you

You also have to declare it when you apply for any other borrowing, which is likely to affect the amount you can borrow in the future in your own name

Nope, nope....never. I used to work in debt collections and now as a Debt Advisor. Amount of people who default on guarantor loans is incredible. I just wouldn't...for anyone.

I had the same request made today. My friend wants to purchase a property but needs a guarantor, her sister had initially offered but pulled out. So my friend asked me. I must admit I was annoyed and found it a selfish request. She sent me a long text listing some chosen information and asked me to let her know ASAP as the broker was waiting. Her husband owns 3 properties (one which they live in) but she wants to purchase a property for her own security.

After looking into it, I wrote down the reasons for why I could not, which is mainly that it puts my house at risk and that’s not something my partner would agree to do. Also that it affects future borrowing. Anyway, I weighed up the options and for me, it is just too big of a risk/ask.

Perhaps weigh up the risks and think about the scenarios that you may have to step up. Would you be willing to do that/would it affect your relationship? It’s always a possibility that those risks may materialise