Mortgage Guarantor Risks After a Breakup

The phone popped up a news alert: "Property prices dropped by two million in three years, cases of negative equity surged." Ah Ling's heart sank—because three years ago, she acted as a mortgage guarantor for her then-boyfriend. They had long since broken up, and the property entirely belonged to her ex, but her name was still on the loan contract.

If property prices continue to fall, can I still remove my name?

What if my ex refuses to cooperate in removing my name and defaults on the loan? Will the bank come after me?

If I apply for a Home Ownership Scheme flat later, will the mortgage be rejected because I'm still a guarantor?

If you're facing a similar dilemma, take a look at the following five most frequently asked questions by readers, which will help you unravel all the key issues at once.

Q: "The owner refuses to cooperate" ≠ completely helpless?

• Nature of the bank guarantee
• The bank can demand the full amount owed from you (the guarantor) at any time; you alone cannot request the bank to withdraw the guarantee unless both the owner and the bank agree.
• You are not the owner and cannot force the sale of the property
• The property is solely under the male owner's name.
• The Partition Ordinance for compulsory sale/partition only applies to "co-ownership"; a mere guarantor cannot use legal means to force the sale of the property.
• Bank debt collection is unfavorable to you
• If the male owner delays or defaults on payments, the bank can pursue the guarantor for the debt.
• Late payment records will be immediately reported to TransUnion (TU), causing your credit score to plummet and affecting future loan applications (such as HOS mortgage).

Q: How to remove a name after a breakup?

• The property owner (ex-partner) must initiate the process by applying to the bank to remove the guarantor.
• The bank will re-evaluate the property and conduct an income stress test.
• After bank approval, the mortgage agreement will be re-signed, and the old mortgage will be deregistered at the Land Registry.

Q: How much do I need to cover the shortfall if the property price drops and becomes negative equity?

Calculation method: Outstanding loan – Latest valuation × Maximum loan-to-value ratio (usually 80–90%) = Immediate shortfall to cover

• Assuming the outstanding loan is $5.02 million and the bank's valuation is $4 million, with a maximum LTV of 90%:
• Maximum loan amount = $4 million × 0.9 = $3.6 million
• Shortfall to cover = $5.02 million – $3.6 million = $1.42 million
• Apart from paying the amount in full, the owner has no other options to reduce negative equity (except selling the property or waiting for prices to rise).

Q: If the owner (ex-partner) refuses to help, what are the usual reasons behind it? What else can I do?

• Common reasons: No money to cover the price difference, income cannot pass the stress test, fear of refinancing costs, etc.
• Guarantor's response: Negotiation, lawyer, negotiating to sell the property to cut losses, etc.

Q: Being a guarantor, will it affect my application for Home Ownership Scheme (HOS) and future mortgage?

• HOS application eligibility: Being a guarantor does not count as a property owner, so it does not affect your HOS application.
• Bank approval for HOS mortgage: The monthly payment you are "guaranteeing" will still be included in the stress test; if you cannot provide a confirmation letter for "removal of name", it may reduce the loan amount or lead to rejection, holding you back.

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