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3rd party loan / guarantor

 
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i_want_house!



Joined: 27 Dec 2005
Posts: 5

PostPosted: Mon Feb 13, 2006 8:20 pm    Post subject: 3rd party loan / guarantor Reply with quote

i'm purchasing a property (landed), the s&p is joint name (wife & I).

when i apply for housing loan as single applicant, the bank wants my wife as guarantor, they said this is what is called 3rd party loan.

is this true or the bank is ripping me off? must my wife be guarantor if i can afford the installments and bought 100% MRTA on the loan?

Question

help! help!
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nick1994



Joined: 24 Apr 2005
Posts: 6116

PostPosted: Tue Feb 14, 2006 12:18 pm    Post subject: Reply with quote

...if not guarantor oso, your wife needs 2 sign 2 assign all her property rights 2 the bank...........and that sort of stuff.....

dun know exact docs or terms.....Nor could help..........



wise, bank wont b able 2 lelong off the prop if u default..........coz her name oso there mar........
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Noor713



Joined: 15 May 2005
Posts: 507
Location: Sri Hartamas

PostPosted: Tue Feb 14, 2006 5:54 pm    Post subject: Reply with quote

Hi i_want-house!

Your ID truly shows you are really serious in buying a house.... Wink

A 3rd Party Loan is when owner/co-owner(s) are assignor(s)/chargor(s) but NOT as Borrower(s). The disadvantage of being in such a position is relying on the borrower to pay the loan or else your share of the property will go `down the drain' as well.

Anyway, if you are qualified to be the sole borrower, why does the bank wants your wife (the co-owner) to be the guarantor? She will need to assign her rights on her half share to the bank and still be the guarantor?? Strange..

A Foreclosure Clause in the Loan Agreement/Charge docs will specifically states that the Bank shall have the absolute right to claim loan amount through civil action in court and a foreclosure proceedings CONCURRENTLY. In other words, your wife's half share can be foreclosed and she being sued in court for the loan amount at the same time.

Maybe your bank has its own theory...beats me....(maybe a banker here can explain this) but whatever it is...be very cautious.

I'm no banker... Wink

Cheers!
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i_want_house!



Joined: 27 Dec 2005
Posts: 5

PostPosted: Tue Feb 14, 2006 7:33 pm    Post subject: Reply with quote

haha, Very Happy , i'm really looking forward to getting a house.

i clarified with the bank, but i can't understand the explanation Shocked

something to do with the co-owner has to be aware that the other owner is taking up a loan, ... if the borrower defaults, the property will be auctioned off if the co-owner cannot update the installments ... and since the co-owner is aware that the borrower is taking up the loan, so cannot sue the bank for auctioning it ...

bottom line - take it or leave it (go to another bank).

sounds like i have no options ;'(

i'll probably ask my lawyer to talk to the bank and explain in plain english to me when and if the loan is approved Mad (before signing the loan agreement)
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preacher



Joined: 20 Oct 2005
Posts: 470

PostPosted: Wed Feb 15, 2006 4:01 pm    Post subject: Reply with quote

Hi i_want-house!

I have checked with my friend whose relatives bought a unit together. The SPA is in 2 names but Loan only in one name. There was no issue but I believe that both persons had to sign the Deed of Assignment ("DOA").

There is a big difference between just signing the DOA and being a guarantor as well. Talk to the bank again. Btw, does the HL installment plus your other financing obligations exceed 1/3 of your gross pay?
_________________
practise what you preach
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i_want_house!



Joined: 27 Dec 2005
Posts: 5

PostPosted: Fri Feb 17, 2006 10:04 am    Post subject: Reply with quote

tq all for the feedback.

looked like i was kind of conned into this. the story is that i approached several banks regarding the loan, and all verbally confirmed that i can apply as single applicant. when i was about to apply, another bank came into the picture and gave me a much better rate, and said also verbally confirmed that i can apply as single applicant.

when submitting my application, i was informed that my other half has to submit set of documents as a co-owner. when the loan was approved, i was told that my other half has become the guarantor.

after clarifying, the bank has stricter policies and require more than 1/3 of gross pay! Evil or Very Mad

since the rates were indeed better, and deadline is around the corner, have no choice but to go ahead Shocked
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winnie the pooh



Joined: 24 Jan 2006
Posts: 1999

PostPosted: Fri Feb 17, 2006 10:41 am    Post subject: Reply with quote

the explanation is flawed cause as you'll be able to gather from the postings, the co-purchaser will have to sign the assignment and will obviously have knowledge of the fact that the other co-purchaser is taking the loan in his/her sole name.

the reason why they may want to add your wife in is probably dependant on your credit rating and bank's exposure. the more security for repayment, the better (kiasu attitude). however, that being the case, i would have thought adding your wife in as a co-borrower may have been the more logical conclusion.
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