Joint Loan with parent

[GalwayCommet]

My father had financial difficulty with the Revenue back in 2007. I was 26 at the time and was living out of the country. Shortly after I arrived back in Ireland my father had come to an agreement with Revenue to pay his bill and large penalties. The total came to approximately 240,000 euro. He was 69 at the time. Since he did not have the funds to pay Revenue his accountant and solicitor advised him to seek a loan from a large Irish bank.


I was asked to go jointly on the loan because of his age. To help out, but not really knowing the consequences I said I would. So, my father, his solicitor, his accountant, and myself all went to a meeting with the bank. Unfortunately, I would say, the bank agreed to lend the 240k over 20 years, as a mortgage but the loan would not be buying any new property. The bank's requirement was the deeds of my father’s property as guarantee for the loan.


I was told (by the solicitor/accountant) at the time that I was jointly signing to allow my father get the loan because of his age. My father has paid all of the loan repayments in full to date and continues to do so. I make no repayments to the mortgage (I’m just named on it).


At the time of the loan, the solicitor drew up a letter which was signed by my father. The letter states that any outstanding amount on the loan will be taken from his estate and that I am not liable for any of the load in the case of him dying before the loan is paid.


My questions are:


1) Does the letter signed by my father mitigating my liability to the loan have any legal stinging.


2) I have two sisters, is it possible they could contest the letter in any way.


3) If I wanted to get a mortgage in the next few years myself will the bank take into account the joint loan as my existing borrowing?

Sincere thanks for your time

 

[trojan]

My understanding is that when your father dies you are fully liable for the loan. It is only the bank can agree to any kind of release your liability.

 

[Monbretia]

Definitely on point 3 the bank will take the repayments into account as you are liable for them should anything happen your father.

Does he have a will made directing that on his death the house is to be sold, mortgage cleared and surplus to go wherever?

 

[Steven Barrett]

At the time of the loan, the solicitor drew up a letter which was signed by my father. The letter states that any outstanding amount on the loan will be taken from his estate and that I am not liable for any of the load in the case of him dying before the loan is paid.

Unfortunately, that's not for the solicitor or your father to decide. It is down to the bank. You are jointly and severally liable to your fathers loan so if he defaults or dies, you owe the full amount.

You would want to make sure that your dad's will is up to date and everything is made crystal clear to your sisters that you are currently on the hook for your dad's debts.

And yes, it will be taken into account when making an application for a mortgage.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Bronte]

1) as others have stated you are always liable to the bank. But I presume you have no money or assets so the bank will wait to get paid from your fathers estate, as outlined in the letter.

I would go to a new solicitor and get all advice on the validity of the letter.

2) you should make your sisters aware of what occurred so they don't contest the will, your father is now nearly 80 so it's imperative you do so soon.

3) yes it affects your borrowing capability which is why it was a stupid thing for a parent to do. People never think of the down the road scenario.

I presume the debt is much reduced as you are halfway through the term? Are there assets to pay down the debt?