Mortgage guarantor

Hi

Myself and my husband went as mortgage guarantors for my sister a few years ago, under the impression that it was for a 12 month period, just to help my sister get the mortgage. We were led to believe that this was just a formality and that she could remove us in 12 months from the mortgage. However, after 12 months the bank wouldn't allow it and said they wanted a few more years under her belt before they would allow this change. Unfortunately, the problem now is that my sister has a business, is a sole trader and and is being forced to close by the banks due to recession etc.. As she is a sole trader she is personally liable for any bad debts on the business and there is a possibility of them coming after the house. I want to know what implications this may have for us now. she has never defaulted on any of her mortgage payments over the last few years. We are very worried over everything. Any advice would be grateful.

Thanks....Lou

" I want to know what implications this may have for us now."

If she cannot pay her mortgage, you will have to.

You should never go guarantor for anyone unless you are prepared to accept that.

mf

If she bought a couple of years ago, is she in negative equity now? (Is the house worth the same as, or less than the amount she owes on the mortgage?)

If so, there would be little point in any business creditor "coming after" the house as it's effectively worthless. The bank own it all.

But if she cannot pay the mortgage repayments, then you and your husband will be called upon to do so, as mf1 points out.