Can You Sell Your House If You are A Guarantor? (Are You Restricted?)


Can You Sell Your House If You are A Guarantor

You may be a guarantor for someone else’s mortgage and you’re now looking to sell your own house. Which means you may be worried to know whether you can sell your house if you are a guarantor.

Being a guarantor will not stop you from selling your own house. Your guarantee on the other person’s mortgage is a guarantee that you will meet the payments of their mortgage if the borrower is not able to. Being a guarantor is not linked to the sale of your house nor to your mortgage.

What it means to be a guarantor

Being a guarantor means you are helping someone else get a loan or a mortgage. But this decision should not be taken lightly, as you are guaranteeing that person’s loan or mortgage, which is a promise to repay the debt if they can’t afford the payments themselves.

You should only act as a guarantor if you know the person well. This would include close family members or possibly close friends. But be aware of the potential fall-out if they fall behind on their mortgage payments. You won’t be able to force the sale of their house, but the mortgage company will be coming to you for the payments.

Can you get a mortgage if you are a guarantor on another mortgage?

Being a guarantor on another mortgage should not affect your ability to get a mortgage yourself. This is unless you are called upon to make the repayments of the friend or family member’s mortgage payments. This may affect your ability to get a mortgage as a guarantor for the following two reasons:

  • If you are now responsible for the loan repayments for the guaranteed mortgage, your affordability will be reduced. When you apply for a mortgage the debt payments on the guaranteed loan will be taken into account when calculating your borrowing limits.
  • If you inherit the debt as a result of being a guarantor this puts you at risk of not being able to afford these payments. If you default on these repayments this will affect your credit report. This may prevent you from getting another mortgage.

Can you get out of being a guarantor on a mortgage?

When you agree to act as a guarantor you do so for the whole term of the mortgage. Which means the only way to get out of your obligation as a guarantor is for the owner to remortgage the property or to sell the property.

  • If the borrower remortgages, the mortgage you guaranteed will be repaid and your guarantor obligations are also removed. However, if the person’s circumstances haven’t changed they may not be able to secure a new mortgage without a guarantor. Unless they are able to find a new guarantor to replace you.
  • If the borrower sells their property and repays their mortgage you guaranteed, this will distinguish your guarantor obligations.

Having said that it is possible to apply for a guarantor release. But this will only be accepted by the mortgage lender if the borrower can demonstrate they can afford the mortgage repayments. Some mortgage lenders may also set a maximum loan to value before they release the guarantor from the mortgage.

Can a borrower remove a guarantor from a mortgage?

The only way a borrower can remove a guarantor from a mortgage is to apply for a loan guarantor release. The borrower will need to be able to demonstrate to the lender they are able to afford the mortgage.

Can a guarantor stop you from selling your house?

The guarantor of your mortgage cannot stop you from selling your house. This is because they are not on the property title deeds. A guarantor is simply noted on the mortgage to pick up the payments if you are not able to make these payments.

Final thoughts on can you sell your house if you are a guarantor

Being a guarantor will not normally prevent you from buying and selling property. However, it may affect your ability to borrow if the mortgage company call in your guarantee. This would mean you now have to make good the payments on the guaranteed mortgage.

It’s very important to understand the obligations of becoming a mortgage guarantor. If you are not prepared to remain as a guarantor for the length of the mortgage term, don’t become a guarantor in the first place. This could mean you are a guarantor for 25 to 30 years or whatever the term on the mortgage.

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