Removing guarantor from home loan/refinance

Hi, everyone, apologies if this is in the wrong place, I have been searching the internet for places to give me advice but it's pretty hard to come by unfortunately. Sorry it's a long one, I tried to give as much information as possible. Really hoping someone can help me out.

My partner and I recently built our first house. We built a 220sqm house on a 623sqm block of land at Narangba QLD in a new estate. Beautiful house with everything we wanted. My partners uncle was the builder and her Dad was the chippie so we were looked after very well.

As we were renting previously we couldn't come up with a deposit so my stepmother (raised me from the time I was 2. I am now 30) agreed to do a guarantor loan with her property as security for our deposit. I believe this amount was around 90k.

To cut a very very long story short, my partner and I eloped to get married in Vegas and my stepmother hasn't taken it well and it has set off a chain of events where we are no longer on speaking terms apart from her demanding to be taken off as guarantor. This situation has escalated to the point where I am desperate to make this happen as soon as possible as it is starting to come between my relationship with other family members. We got married in March, moved into the property in June this year so we haven't been in here very long.

I know the legalities of everything and I know I don't have to do anything at all if I don't want to, but I need to get her off the loan as it is obviously a very sensitive situation causing my wife and I great stress and there is a lot of emotion around the whole thing.

We went through a broker to build the property, and ANZ provided the home loan. This was convenient as all my loans/accounts/cards are also with ANZ. The total cost for the property was 480k, and the build valuation came through at 480k. Since the build valuation we have turfed the entire property, installed colorbond fencing, started the landscaping and laid a 7x3m concrete slab so we can put in an outside patio soon (aiming for next summer).

I spoke to ANZ and explained the situation and they agreed to do an 'as if complete' valuation to try to get the property valued. They asked for amounts of all the additions we were planning to make (came to approx 15k) as well as the money we had spent on improvements since the last valuation, (came to approx 13k).

There seemed to be some communication errors on their part and even though I asked if I needed proper quotes and building contracts, I was assured I did not. The valuer showed up and didn't know it was an as if complete valuation and said she would require building contracts etc, despite being cc'ed on the emails with the whole conversation.

She said something about there not enough comparable sales in the area, as it is a new estate, and ANZ informed me that she valued the property as it currently is for 490k. My wife and I thought this was quite low especially as the valuer was only there for 10 minutes and seemed very keen to be on her way. She kept slowly backing up while I was asking her a few questions and was about to get in her car without even seeing the rest of the yard, which she then came up to take a picture of only after I asked if she needed to see it.

ANZ called me the next day and said with the valuation that low there was nothing they could do and it seems to me like it's either too much work for them to follow up or they figure that they already have the home loan so they don't want to refinance.

I would really like to know if there is any other options to get this done. We have a 130k household income and no dependants. I know one option is to have the current guarantor replaced by another, but unfortunately that is not an option. I'm not sure if different valuers may look at the property differently, or wether there are lenders who will do an if complete valuation, but at this stage I am desperate for this whole ideal to be over so we can move forward.

Thanks in advance, hoping someone can help or point me in the right direction.

 

I believe so, we obviously haven't been able to pay much off after only a few months and spending most of our money on landscaping etc.

 

It is simple really. You need to get the LVR down to a level acceptable to the bank - 80% or maybe 90%.

Without this happening you will have to come up with other security or they will not release the other property.

How long till the construction is finished?

 

The construction is finished, we have been living here since the end of June.

 

What did you mean by the 'as if complete' valuation?

 

The house is completed, but we were planning on doing some additions to the house in the near future, this includes a side patio, back shed, concrete garden edging and some additional landscaping in the front yard. ANZ said it was possible to get the valuation done as if all of these things were already in, however the company that did the valuation must have had a communication problem and it didn't get done like that.

 

No chance of that!

 

Yeah I thought it was strange that the ANZ guy said it in the first place, but he did. It didn't end up happening like that so he must have messed up by telling me.

Do you know how much security we would have to come up with if we have only been valued at 10k over what we paid? We have been paying interest only on the main home loan but paying principal and interest on the guarantor loan but I doubt the amount we have paid is anything substantial. When a banking friend worked it out she said we'd need to get to about 535k to get over the line. Do you know if we're able to use cash/security to cover the ~45k difference? Or refinance the house with our other personal loans/assets (a Mazda 3 and a Harley)? Or can someone "buy in" to the house?

There really isn't much information out there on it all and even the bankers I have been speaking to really have no idea.

 

How much is the loan?
Best case you would need to get the lvr to about 90% so assuming a $480k valuation the loan can be $432k.
Best case would be a valuation of $535,000 which will allow the release of guarantee with no repayment/additional borrowing.
If you have a car and harly - sell them. Or you could 'reverse mortgage' them with a car loan.
A bank wont secure them for a house though.

What a mess!

Blacky

 

Can you reach out and repair your relationship with your stepmum?

 

Thanks for the reply. Yes, what a mess indeed. You have no idea haha.

The loan amount was 480k. So if I need to get to 535k and my valuation is at 490k, would the best bet be to just to try to come up with the 45k difference in cash? I could probably sell the bike and a few other things to get me closer, but would it be an option to get a personal loan from another bank to make up the difference? Affording the extra repayments isn't really an issue, it was just the initial deposit we couldn't come up with.

 

I'm with Gockie.

Your step mum may not be your biological mother, but as she raised you from the age of 2 she IS your mum.

I am sure you did not mean to hurt her by eloping, but clearly your actions have hurt her badly. In the long run, it would be good if you could re-establish your relationship with your step mum.

The loan is a separate issue. It would appear that all you can do is reassure your stepmum that you will remove her guarantee as soon as you can.
Marg

 

I would love nothing more than to do that. This has ripped me apart. She has always been so much more than a mother to me from when she married my Dad when I was two. Even when they divorced when I was 18 I stayed living with her until I moved out to work in the mines when I was 22. I only saw my real mother every second weekend growing up. She always had big problems with addiction and I didn't see her at all for a few years.

In a big plot twist, my father and my mother ended up reconnecting a couple years ago and ended up getting married, which was very hard on my stepmother after her taking me in as her own. I have tried to assure her ever since Mum and Dad got remarried that nothing had changed between us and she is still my favourite, but it seems getting married overseas made the situation explode as she thought she deserved to know after helping us out with the house. Truth be told I'm not 100% sure why it's gone like this and I'm constantly thinking about things I could have done differently, but she wants no part of me any more and her making threats against my wife was the last straw for me.

 

Yep. thats basically what you need to do.
Potentially you could get a loan against the current value of the car and bike (not sure what this would be? maybe $15k each). Then take a personal loan for the additional $15k or so.

The issue would be however, that the release of security (guarantor) would likely trigger a file review. Therefore if you have an additional $45,000 in personal loans would you still service according to the bank (reality and banks dont always align on this).

Best to speak with a broker. Fast!

Blacky

 

Sorry to hear that. I'm far from a relationship expert, and I can't read her mind except I would think she's feeling very rejected with everything thats gone on (including from your dad) and she has brought out all her anger at you.

I still recommend trying to mend your relationship. She is more of a mother to you than your real mother, raising any child from 2 year old can be considered a burden to speak honestly..... loss of freedom, so much responsibility...
You are only 30, still a long road ahead to lead in your life...

 

Awesome, thanks so much Blacky, this is exactly what I needed to hear. I've been a total wreck since the valuation came back and I really needed to know that there is an option to get out, even if it is a long shot. I have just emailed a few brokers around my area so I will meet with them all next week. Hopefully one of them can help me.

 

Long and the short of it is that if the valuation is $490k - you need to get your loan down to about $441k.

Might need a re-fiannce in order to do so.

Blacky

 

I reckon it might be possible to get 95% on this sort of dollar for dollar refinance. Might help a little, but the lmi would be steeper. Get a couple of vals, from different lenders, as is. Not after you finish the patio etc.

Then take the information to the guarantor. Explain the situation and ask her to lend you any shortfall you need. If she really wants off that's the only solution.

 

I have to ask, why Vegas?

I didn't think it was legal unless you are American.