Love My Daughter

My daughter has a $300,000 home loan on which my wife and I have gone guarantor. The loan is split into two parts. Her payments have all been going to the larger proportion ($240,000), so she asked her bank about the best way to get rid of our guarantor commitment ($60,000). They have advised her to pay all her payments to the $60,000 component and change the $240,000 to interest only. I feel this may have long-term implications for her. What do you think?

Lorraine

Hi Lorraine,

My first thought is that if you’ve had the loan for a number of years, you should consider getting the property revalued. If the property has increased in value, you may be able to be released as guarantor. If it hasn’t, I have no problem with your daughter directing her efforts to knocking out your part of the loan. I hope she buys you a nice birthday present -- you deserve it!

Scott