Q. – 9 years ago, my Dad who is now 68 guaranteed my mortgage – I was somewhat short of the required income level then but the bank insisted he be added to the mortgage. Even with a recent salary reduction, I am nearly at the level where my own income now is sufficient for the mortgage while I also have savings that could reduce my mortgage to even more acceptable levels. I now want to take my Dad off the loan while my mortgage is also on a fixed interest rate with my bank. What’s the best way to proceed with this ? Peter – Ballybofey Co Donegal
A. – Hindsight is a wonderful thing Peter – accepting a 59 year old father to guarantee or go joint mortgagor a son’s 30+ year home loan should never have been allowed in the first place. You have a number of steps to take :
- See your lender and bring your Cert of Income from 2024, your last 3 pay slips and ideally an up to date status employment note from your employer
- First you should request that, based on your current income and job security, your mortgage be placed solely in your name and that
- Your father’s name be deleted from the mortgage deed – with the repayment and loan amount to remain the same.
- If they deem your income insufficient to warrant the request, ask them what level of borrowing would satisfy them based on your current income that would allow your father’s guarantee to be waived ?
- If you have savings, offer to either pay off the amount to the level they desire – the bank should be delighted with the lump sum or place that amount in a deposit account with the bank if they are going to charge you a fee for breaking the fixed rate. They can then attach a lien as security for the mortgage until such time as the reducing loan balance does nt need that deposit or the fixed rate matures.
- If you are allowed to repay without penalty, it will also reduce your monthly mortgage pro rata. Better for your cash flow.
- You will need to brief your solicitor to make the necessary legal changes plus amend the direct debit if need be.