Guarantor for son's mortgage

In 2004 went guarantor for son's mortgage to get him on property ladder

Mortgage balance 155k
Interest only 550 per month
Interest + capital 1120 per month (from Sept 1st)
Term remaining 16 yrs
Market value: Could make 140K+

Interest only for a few years now, so this is looking a bit unsustainable. My son has only temporary work ending soon and then only dole for single man.

My own financial situation is dire. Have High Court judgement for 500K registered against my portion of the family home (different bank). This is my only asset with a mortgage of c 100k . In reality I am a guarantor without the means to fulfil obligation.

What is the most prudent way to proceed?

Would appreciate any advise..

Wait for your son's bank to contact you and then write to them acknowledging your responsibility for the guarantee but point out that you have no means to meet it.

If you are insolvent overall, apply for a Personal Insolvency Arrangement.

Brendan

Thanks Brendan,
What I am trying to tease out is how we deal with the bank.
Should we concede that the mortgage is unsustainable and tell them so.
Or should we go through the motions of filling out another MARP form.
The Sept 1st payment cannot be met going forward.
Ideally we would like to sell property and then deal with the balance - we don't want a firesale.
Would voluntary surrender or voluntary sale apply here.

It's likely that the bank will agree to a voluntary sale. They won't write off the shortfall though.

Brendan

If the guarantor has no means to meet the shortfall they may write it off as if they receive 140,000 then bank only lose 15,000 and may cost more to persue the balance knowing their circumstances.

I think there are two separate issues here :

1) The Son's situation
2) The father's situation

These should be dealt with separately.

The son is like a lot of other people. For the time being he is stuck and cannot pay his mortgage. I think its a bit drastic to start running out to sell the house. The amounts of money involved are not huge and presumably the son needs somewhere to live. The son needs to come to an agreement with the bank, probably along the lines of a split mortgage to pay something small each month until his situation improves. If he cannot make any progress with the bank informally then I would encourage him to apply for a PIA.

In my view the father has nothing to worry about. He signed up as a guarantor but is insolvent and already has a judgment mortgage of 500K on his share of the house. The bank may well have a look at his situation but I very much doubt that it will take any action against him, given his level of indebtedness