Guarantor Query

Ferris

I am in the process of trying to get mortgage approval to buy a house with my Girlfriend. We have been told by my broker that we will need to find a guarantor to get the amount we need. I have asked my parents (both full time employed in their 50's) and they have said yes in principle.

One question they had was what was the best way to guard against problems should the GF and I split (unlikely but has to be considered). I presume that if this was to happen, and my parents were guarantors, they would still be liable for the full loan should my GF and I default.

Is it possible for her parents to guarantee her share of the loan and my parents to guarantee my share.

Im sure that this is a common situation in Ireland now and I would appretiate any advice.

The_Conductor

Ferris wrote: »

the best way to guard against problems should the GF and I split

In cases like this- parents obviously have the best interests of their own children at heart, and not those of the partner who has subsequently split. Particularly in a falling market- having a guarantor on your mortgage is a very precious asset- and while the banks interests are safeguarded, should you be forced to sell the property- your interests and those of your parents are not.

A legal document detailing rights and entitlements should the relationship breakdown could be drawn up- however as it is most probably a liability which would have to be divvied up- rather than an asset, this can be problematic. At the end of the day- the asset or liability belongs with you and your girlfriend, not with your parents or her parents- and this must be recognised by both parties in the event of the relationship breaking down. Thereafter its a case of your parents safeguarding their own interests (and incidentally yours) by specifying what their obligations are (which may differ significantly from the banks understanding of what their legal obligations are).

Shane

Ferris

Thanks Shane,

I totally take your point that the ownership of the property should be set down in a legal document, with details of who paid what etc along with your well founded advice regarding the banks looking aftertheir own interests. This is especially important as I will be funding a larger part any purchase as I earn more. I just don't know how exactly that would work from the point of view my parents being guarantors.

I do not plan on needing to rely on my parents to support me incidently.

The_Conductor

Solicitors have become adept at drawing up agreements such as these over the past couple of years. Previously it was only the super wealthy who made these agreements- but now they are pretty everyday things. Any solicitor worth their salt should be able to draft something suitable for you.

Shane

godtabh

Maybe not for here but in relation to the legal agreements how well do they hold up?

Friends of mine recently bought a place and were looking to set up a legal agreement between the two of them but were advised not to do so as there is no bases for them in Irish law.