Points To Remember Before You Sign As A Loan Guarantor - Loan Trivia


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Monday 16 May 2022

Points To Remember Before You Sign As A Loan Guarantor

home loan Gurantor

House purchase often fulfils one of the long-term security assurances of households while also serving as an invaluable asset over the time. Availability of home loans to individuals across occupational statuses means easy house purchase today. Some lenders may, however, seek a home loan guarantor when approving funding for select individuals

Such need often surfaces when an individual does not accurately qualify for all home loan eligibility requirements or has a weak financial standing. However, when agreeing to be a guarantor for a home loan, one must be well-aware of a few important aspects.

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Below listed are some of them to take care of:

  1. A guarantor may or may not be a financial contributor to the home loan, adding up to the repayments made. While non-financial guarantors only serve as an alternative contact while financial guarantors contribute to the repayment as well.
  2. You must also know all the obligations that you would be entrusted with when signing as a guarantor, which may include the likes of any additional fees or charges for late payments, and other liabilities along with home loan EMI payments contribution.
  3. Check if and how becoming a guarantor impacts your housing loan eligibility or eligibility for any other financing.
  4. In case you contribute to the repayment liability, note that you will be eligible to receive home loan tax benefit on both principal and interest paid as per proportionate contribution.
  5. While home loan tenor does not directly impact your status as a guarantor, your liability is considered applicable until the loan is fully repaid. You must thus consider the tenor before signing as well.
Once agreed, make sure the EMIs are paid in time towards full repayment of the advance as any missed or delayed payments would impact your individual creditworthiness as well.

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