Bank wants father named on mortgage debt

[pony]

Hi all, looking for a bit of advice and did not find any similar threads already.

Myself and girlfriend have been given a loan offer and have found a house we are really interested in and want to buy.

However, i have just recently changed jobs (permanent position) that is subject to initial six month probationary period and this is causing problems.

Based on my income and girlfriend’s income we fully qualify for what we want financially from the bank. but as i am still in my six month probationary period the bank are insisting my father go 'named on debt' with myself and girlfriend - so basically the 3 of us would be on the debt. but only myself and girlfriend would be on the deeds.

my father has no problem in guaranteeing anything for six months to a year, but feels he is being asked too much – basically he is being asked to sign up to a 35 year mortgage and then we can ‘apply’ later to get him taken off (which bank have assured would not be problem but they wont put in writing anywhere).

Has anyone had or heard of similar experiences, might there be any other alternatives then what the bank is proposing – I was hoping they would meet us half way and maybe take letter of guarantee or write something into the loan contract, still negotiating with bank but not looking good.

I heard today about someone in same situation who was able to come to a solution with bank by lodging a full years mortgage repayments into a separate account for a year as a sort of insurance for the bank – any ideas if this is common practice?

Any advice at all would be much appreciated thanks.

 

[pjmn]

Another option they (the bank) might consider is issuing a side letter, stating something like, that assuming repayments were maintained for say 24/36 months and that at that stage you and your girlfriend were earning sufficient from your permanent positions to justify level of mortgage then your father would be released from same.
Above is top off the head, and may warrant some tweaking – but it will give you the general gist of what I’m saying. BTW I doubt they would consider a 12 month option on the above.

 

[mathepac]

... and then we can ‘apply’ later to get him taken off (which bank have assured would not be problem but they wont put in writing anywhere)...

Which means its a problem, not for the bank but for your Dad.

Ask the bank again to provide you with details of the actual steps and the astronomical costs involved in removing one person's name from a mortgage.

What's the rush? Why not wait for the six-month probationary period to finish?

 

[chlipps]

What is your solicitor suggesting here? Will another bank give you the mortgage?
How many months have you to go before probationary period is up? If only few months, then it will probably take that amount of time anyway to get contracts exchanged etc..

 

[Bronte]

my father has no problem in guaranteeing anything for six months to a year, but feels he is being asked too much – basically he is being asked to sign up to a 35 year mortgage and then we can ‘apply’ later to get him taken off (which bank have assured would not be problem but they wont put in writing anywhere).

Your dad is so right, he would be signing up to a 35 year mortgage. All you have to do is wait six months, you can save some more and have a reduced mortgage. Or over a shorter term, 35 years is way too long for a mortgage. I would not recommend a 35 year mortgage to any young buyer.

Even worse your Dad would be signing up to a property with a non relation - your girlfriend. This has all the hallmarks of a mess. Your Dad and you should read some of the stories on AAM of non married couple's who bought a house together and split up.

 

[TLC]

I would agree to check out other lenders it is a lot to expect a father to agree to that kind of debt. or wait until your six months is over. What does your solicitor think?
Our son had to get us to "guarantee" part of his 180,000 mortgage - 20,000 actually - which I thought was just stupid - I would have thought that if they deem him responsible enough for the 160,000 the 20,000 is only a side issue. To me it doesn't make sense but we did it anyway. If the banks had been as responsible with developers etc. they wouldn't be in the trouble they are in now - but that's a different story of course. Best of luck with your purchase.

 

[seantheman]

What's the rush? Why not wait for the six-month probationary period to finish?

+1 Ye may even get your house cheaper in six months. Dont saddle yer poor old dad with this debt.Like most fathers he would probably do anything for his kid and would feel bad doing anything other than agreeing to be guarentor.

 

[pony]

Cheers all, no real rush but we really do like the house and are sure we want it - have put deposit down on it actually (still refundable).

basically it's a development perfect for us and house looks (on plans as its not actually built yet) very attractive (size etc) and is only one being built (so far anyway) on the development - corner site that means no hall so bigger living area and garden etc.

Got price down on it and i'm happy enough with the price per square foot and size of repayments. i defo dont think market has bottomed yet, but that being said i'd probably accept the risk that i could possibly be paying a premium of maybe 10,000 or so for dream home factor. i defo dont think they would have too much hassle trying to find someone else to buy it.

going to try a few more banks as aib bankcenter totally unwilling to try come to some sort of compromise. i think i may have to strike a deal with the builder about waiting until January when probation up - will give him non-refundable deposit to secure it.

have talked to the builder and he was pretty open about it all and not overly negative (although nothing confirmed yet). i mentioned doing some sort of deal like that where i'll give them a non-refundable deposit - but not sure if they will start building on the strength of that alone (although i guess that is not most important thing).

builder would start building it tomorrow if we signed contracts but not sure if thats good idea if finance still not finalized, even though we 100% plan on buying the house - any thoughts on that? solicitor was fairly against the idea of signing the contracts now given we are not happy with and probably wont be taking up the loan offer - totally understand her point.

any ideas on what sort of arrangement might be possible with the builder and worth suggesting?

also anyone think any banks would be more willing to arrange a compromise - we are both in stable jobs, and not a bad risk if anyone actually looked our situation individually (instead of the machine that we have come up against on current loan offer - aib bankcenter in ballsbridge)

 

[pony]

p.s. solicitor did not suggest much - she pretty much washed her hands with it and left it up to us to find a solution (via another bank or the builder), was hoping she would be a bit more helpful in dealing directly with the bank, maybe she thought it not worth the effort with the bank.

 

[chlipps]

Sure if the house is not built yet then you will only need to pay a stage payment now and not the full amount, why does bank need guarantor for stage payment? I think you just need to go to few more banks and shop around for best deal that you can get.

If they are this awkward now about a guarantor what way will they be over the duration of the mortgage,.. i would shop around and prefer not to work with them

 

[mf1]

p.s. solicitor did not suggest much - she pretty much washed her hands with it and left it up to us to find a solution (via another bank or the builder), was hoping she would be a bit more helpful in dealing directly with the bank, maybe she thought it not worth the effort with the bank.

The problem is that you want to buy a house and you need a mortgage to buy it. Its up to you to arrange a mortgage - not the solicitors function. So, if you can't get a mortgage , you can't buy the house. Now, if the only way you can get a mortgage from this bank is by having your father guarantee the mortgage, then that is too much to ask. Of your father. You can ask other lenders if they will lend but the chances are they won't without more security.

Let the house go. Or see if another lender will lend.

But do not try and go ahead without loan approval on terms you can deal with.

mf

 

[pony]

thought solicitor might be able to negotiate with bank on my behalf, she is the expert not me - i am paying her a lot of money after all. it probably would not have made any difference anyway as bank i'm dealing with are digging their heels in.

am in contact with two other banks so hoping to hear more tommorow.

failing this i'll probably have to make some sort of offer/deal with builder.

 

[pony]

any ideas on how to approach the builder - how can i confidently secure house without signing contract, any ideas on rent to buy deals?

 

[mathepac]

thought solicitor might be able to negotiate with bank on my behalf, she is the expert not me - i am paying her a lot of money after all...

Just to repeat what mf1 said above - it is not your solicitor's responsibility to negotiate a mortgage or mortgage terms on your behalf with a lender. Your attitude smacks of "I give her money, she does what I tell her".

If this is your expectation of your solicitor in the transaction then perhaps it is better that you withdraw now and research who exactly is responsible for what.

 

[pony]

Your attitude smacks of "I give her money, she does what I tell her".

no, not at all - just thought she would be more informed then me on it all and be able to advise me better. as it stands i'm fairly ignorant when it comes to dealing with the banks re mortgage so not exaclty 100% sure what options i may have available, and obviously the bank is going to steer me in direction that is their most prefered - i think this could be a reason why bank now digging heels in. any new other applications i make with be framed by this question from the very start so hopefully might enable a bit more flexibility from both sides.

not meaning to cause offence..

 

[Bronte]

You are not listening to either your solicitor, the banks your father or anyone on here.

1. You cannot get a loan
2. You still want to sign a contract even though you have been told not to
3. You are buying off plan
4. You are thinking of paying over a nonrefundable deposit
5. You are not related to the person you are buying with
6. You think that just because you pay a fee to a solicitor to cover legal matters that they should do the groundwork for you
7. You want your parent to become part of your debt
8. This parent doesn't want to do that
9. You've said there is no real rush so why the panic
10. You think you can call the market (10K over market price bottoming out)
How much is your large fee to the solicitor? She must love you.

 

[pony]

1. You cannot get a loan
2. You still want to sign a contract even though you have been told not to
3. You are buying off plan
4. You are thinking of paying over a nonrefundable deposit
5. You are not related to the person you are buying with
6. You think that just because you pay a fee to a solicitor to cover legal matters that they should do the groundwork for you
7. You want your parent to become part of your debt
8. This parent doesn't want to do that
9. You've said there is no real rush so why the panic
10. You think you can call the market (10K over market price bottoming out)
How much is your large fee to the solicitor? She must love you.

1. can get loan but just trying to get deal most suitable to situation.
2. never said this - i want to secure purchase option on the house without signing contract if possible.
3. yes i am but from seeing the standard of what is already built i'm not too worried about this.
4. kindof relates to 2.
5. so - we have been together a long time, can be just a tricky when people are related.
6. this is crazy statement, of course i dont expect this.
7. no i dont want this - bank trying to force it on us.
8. he is comfortable with backing anything needed for a year say - but not comfortable with prospect of going on debt for potentially full term. i totally am with him on this, think he is being asked too much.
9. no real rush, but this is the house we want so happy to try seal the deal - this is dream home number 2 we have been involved in (first one fell through after seller pulled out at last minute) so we know what we want
10. no one can call the market - i meant i know i run the risk of overpaying, does not mean this will be realised.

Really I’m wondering about what sort of options (in readers experience) i may find at other banks, either letter of guarantee type solution, contractual solution (some stipulation in the contract) or insurance type solution whereby we lodge years repayments up front to be held by bank as insurance for a year

other option is dealing with builder to put purchase back until I’m out of probationary period and we can get the mortgage straight forward – again if anyone has any opinions as to a good approach to this issue then would be really interested to hear.

Totally accept all the points made so far, the decision has not been made yet as to how we will proceed so I’m just trying to exhaust every avenue

cheers

 

[Vonga]

Why don't you go to a mortgage broker? They are the experts in dealing with obtaining a mortgage and should be able to arrange a mortage with a different lending institution where the terms are more favourable to you and your girlfriend.

 

[pony]

got a contact for a broker who has a direct channel to underwriters in BOI, apparently they did not rule out offering us loan without someone else named on debt in principle so they may look into our individual case a bit more. positive enough so far but will have to wait and see, might be just a long shot.

think i saw 5 year fixed with BOI of 3.30% would jump at that if given chance.