Releasing a guarantor from mortgage

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FlooZee

Registered User
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15
Hi,

is it possible to get some sort of agreement with bank/building socieyt to allow a guerantore to be relased from a mortgage after a certain number of years?
 
Once you fit the lender's criteria for the outstanding loan on your own with regard to your income/outgoings you can request that the guarantor be released from the mortgage.

Sarah

www.rea.ie
 
is it possible to get an document to state this before i buy the house to say that once my income is a a certain level that my guarantor will be released.
 
Howitzer said:
Why? Is there some stamp duty loophole you're hoping to exploit?
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Stamp duty is determined by the sale price and type of purchaser, it has nothing to do with having a gaurantor or not.
 
there is no stamp duty house is worth 315 and im a FTB.
I want an assurance for my guarantor.
 
SteelBlue05 said:
Stamp duty is determined by the sale price and type of purchaser, it has nothing to do with having a gaurantor or not.
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I thought there was a bit of a kerfuffle last year when the Revenue let it be known that they were putting a bit of a squeeze on FTB's where someone else was going guarantor. Principally to stop the situation whereby parents were maybe taking a 50% stake in a property via their children and no stamp duty was being paid.

This sounded like that sort of scenario.
 
the property will be in my name, its called 2 buyer 1 owner (its worded like that). I need a guarantor to help me get a mortgage of 290K, on my own i only got round 200K. But do banks/building socitys do such as thing as agree to release the guarantor at a certain time.
 
Howitzer said:
I thought there was a bit of a kerfuffle last year when the Revenue let it be known that they were putting a bit of a squeeze on FTB's where someone else was going guarantor. Principally to stop the situation whereby parents were maybe taking a 50% stake in a property via their children and no stamp duty was being paid.

This sounded like that sort of scenario.
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Ah right, I think that blew over, as long as you are not taking advantage of the FTB status then there is no problem. As long as the FTB claimant is actually living there then there is no issue. And anyways, I think having a gaurantor was never an issue, it was more to do with parents putting their names on the deeds and renting the place out.
 
Howitzer said:
I thought there was a bit of a kerfuffle last year when the Revenue let it be known that they were putting a bit of a squeeze on FTB's where someone else was going guarantor. Principally to stop the situation whereby parents were maybe taking a 50% stake in a property via their children and no stamp duty was being paid.

This sounded like that sort of scenario.
Click to expand...
See here

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Sarah W said:
Once you fit the lender's criteria for the outstanding loan on your own with regard to your income/outgoings you can request that the guarantor be released from the mortgage.
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Judging by this I doubt if you'll get a lender to agree to dropping the guarantor if/when you reach a certain wage etc. They will agree to it if/when you meet the criteria. Given that this may be some time from now they will not know what the criteria will be, so the chances of them setting out detailed criteria now for you to use down the line (what could be a long way down the line - nobody ever knows what the future will hold) is slim.
It’s always worth asking while you’re doing your investigations, but I'd be surprised if they'd give you anything in writing to that effect.

As your pay rises, other outgoings reduce (car loans etc), mortgage reduces etc you should be able to convince the lender to allow you take the mortgage in your own name and release the guarantor.
 
ive spoken to my broker and i come under all of these:
"The transfer of the house is taken in the name of the child.
It is the intention of both the child and the parent that the parent is not to take a beneficial interest in the house.
The parent has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase.
It is not intended that the parent will be contributing to the repayment of the mortgage in the normal course. "

so will the mortgage provided agree to release my guarantor after a certain time?
 
As per my original post - when the guarantor is no longer required by dint of you qualifying for the mortgage in your own right then you can request that they be released. It's unlikely that the lender will commit to a time scale as they will need proof as and when this happens.

Sarah

www.rea.ie
 
I have succeeded in amending guarantee documents for clients to reflect a limit on time or amount in similar circumstances, so I would think you should push the bank strongly on the issue.
 
my broker said they will unofficially release after 2 years of the payments being honoured. im gong to call him and ask to go back to them for clarification.
being a FTB is stressful!
 
no way! broker said no way! no lender will give a document to say guarantor will be relases once certain criteria are met.
 
Hi Floozee, that is inaccurate. Where someone is providing a guarantee, the bank will usually request that the guarantor meet with an independant solicitor to obtain legal advice on the document prior to signing. So I have quite often been involved in giving legal advice to guarantors prior to signing ( I'm a solicitor). The guarantee that is furnished is a standard document, but I have in the past negotiated amendments to the standard document in the past- for example to state that where the borrowers salary or income increases to a level where they would no longer require a guarantee, that guarantee will no longer be relied upon by the bank or where the level of the amount outstanding decreases to that level, the bank will no longer rely on the guarantee. As with most similar transactions whether any bank will allow such amendments depends on the bargaining strength of the borrower.
 
Vanilla said:
that where the borrowers salary or income increases to a level where they would no longer require a guarantee, that guarantee will no longer be relied upon by the bank or where the level of the amount outstanding decreases to that level, the bank will no longer rely on the guarantee.
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Once you reach the level where you have the income/capacity to cover the loan without the guarantor it should no longer be an issue. If your bank/lender aren't in agreement with this you always have the option of taking your mortgage to another institution (possibly more competitive at the time).

I do think you'd have a problem getting the bank to agree to exactly what conditions you must meet this far in advance, they won't want to play themselves into a corner should the conditions change.... but who knows what is possible with an active broker/solicitor on your side.

My opinion would be that (the easier/lazier way out with little to no financial implications for you or your guarantor) if you feel your in a safe position to cover the payments the guarantor is in a very safe position, as a parent they will no doubt be aware of this (most parents, whether guarantor or not, if in a position to do so would cover a child in financial trouble anyway). When you are then in a position to cover the entire mortgage yourself, you can do so..... whether this be with your current lender or switching mortgage to another.
 
Limiting the guarantee is important for the guarantor, not so much for the borrower. Although what Satanta says in terms of your capacity to remortgage and walk away from the guarantee is correct, where limitations on guarantees become important is for example in the context of a marital or partnership breakdown of the borrowers....
 
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