Home loans are undoubtedly a significant financial commitment, and to be a guarantor means to be a part of that financial liability. Nonetheless, before becoming a home loan guarantor, you need to be wary of a few pointers to avoid making any mistakes.
Points to consider before becoming a guarantor for housing loans
Understand the obligations and consequences
The first point to consider before you apply for home loans, especially if you become a guarantor, is its obligations and consequences. The obligation is to pay EMIs on time, and the consequence is facing legal troubles in case of default.
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Type of guarantor
Usually, there are two types of guarantors for home loans, financial and non-financial. If you sign as the latter, essentially, you will offer certification regarding the borrower or be the one lenders contact if they cannot reach out to the primary borrower. In the case of the former, you will be responsible for the repayment of credit if the primary borrower falters.
It affects your eligibility
You should also realise that being a guarantor can also affect your eligibility criteria for home loan or any other credit. In case of any unfortunate incident, if you fail to repay the credit, it will damage your creditworthiness as a borrower.
Nonetheless, keep these pointers in mind before agreeing, and read through terms and conditions before signing.
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