Possible to go guarantor for a parent?

We know about parents going guarantor for children, but can two well paid adults go guarantor for their mother? The loan would have c. 50% LTV. Their mother is 67yrs old. Obviously the finance would also be secured on the investment property that their mother wants to renovate, and also clear an existing mortgage on the property. The existing mortgage is a tracker ECB+0.5%.

Would the bank be willing to re-mortgage the existing tracker and provide funds to renovate the property? All on a standard variable. In other words the bank would be free of the tracker too! Current loan is E230k. Renovation costs etc would be c.E100k. ie Borrow E330k. Her daughter and son-in-law would guarantor the loan, aswell as it being secured on the property. House value estimated around E650k. (Nextdoor sold a couple of years ago for just over E1M).

Anyone ever hear of this happening?

Thanks

Will your mother be able to get a mortgage protection policy for the amount? If not - this may be a problem for the bank.

Does she have income etc

It sounds very complicated and complicated is not good when looking for a loan these days.

What is the value of the house / site now? The total loan would be €330k, assuming that an 80% LTV is assigned to an investment property loan, the current site / house would need to be valued at over €410k. That is unless you can find a bank that will lend based on your expected future sale price.......which is not likely. It is advisable to get one or more local estate agents or valuers to look at the property and give an idea of the current value and the value after the work is carried out.

If it still makes sense to proceed, you should retain the excellent tracker rate that is in place main loan. As you have the funds/equity to guarantee the loan, you could take out the loan in your own names to fund the renovation. There would be other implications to this such as taxation but it would have the advantage of you controlling the spend on the renovation and protecting your 'investment'

I understand the whole life cover thing. Hence her daughter and son-in-law guarantoring the loan. From what I hear, the house will be left to them when that day comes anyway.

They would probably just take the house now but the CGT for her mother would be approx E120k seeing as she bought the house in the 1970's and there's no way she could afford that. The house was re-mortgaged a couple of years ago (when it was valued for the bank at E900k) in order to buy property in Italy.

The house is currently let and obviously well covering the mortgage. Rent is E1600 a month. Not 100% sure of value of the house but it would be approx c.E650k, having being valued around E900k a few years back.

PatrickDub said:

... The house was re-mortgaged a couple of years ago (when it was valued for the bank at E900k) in order to buy property in Italy...

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Release equity by selling the property in Italy.

The two properties in Italy were given to her sons. All legals etc have been completed.

My query is just a general "can it be done?" question, and has anyone any experience of it and what hoops the bank need you to go through.

Thanks

It can be done. I rather think the Bank will not do it though.

Think of the headlines: Bank lends money to 67 year old who has no capacity to repay?

mf

mf1 said:

It can be done. I rather think the Bank will not do it though.

Think of the headlines: Bank lends money to 67 year old who has no capacity to repay?

mf

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Hence her daughter and son-in-law being guarantors for the loan, and then when she passes away the mortgage will either be redeemed by the sale of the house, or, her daughter and son-in-law move into the house and take over the mortgage and continue paying it. They will be left the house anyway, whether that's in 2 years or 22 years.

The one thing that they thought would be looked on favourably by the bank would be the fact that the bank get out of the loss making tracker.