Be Home Loan Guarantor At Your Own Risk
Nowadays, asking for a guarantor by banks is a normal condition and requirement of a guarantor gets increased if the monetary eligibility of a borrower doesn’t match with standard set of bank. But, really is it a good idea to become a guarantor? Let’s find out-
What are the varied types of loans for which banks insist on guarantor?
It is the risk attribute of the loan that arises need of a guarantor. Generally, banks have formulated their own pre-defined guidelines and have standards to check creditworthiness of a borrower. Therefore, when the borrower will fail to comply with those standards of creditworthiness, banks would characterize him/her as a risky and thus, it will ask for a guarantor. Generally, guarantor is required in following cases-
· If the borrower has a dubious home loan repayment record.
· If the borrower has a transferable job or it involves frequent foreign trip.
· If the borrower is living in such an area where recovery is usually difficult.
· If the borrower doesn’t have a permanent address and the same gets changed on a frequent basis.
· If the security which is offering by borrower, is lower than the value of loan.
What are the various risks involved for a guarantor?
The legal liability of a guarantor is exactly same as that of the person who has originally taking the loan. According to law, the legal position of a guarantor turns into borrower, if the original borrower will fail in loan repayment. In such a scenario, guarantor will be legally bound to pay outstanding debt, if it is becoming difficult to trace the original borrower. In such a case, even the personal assets will also be liable to be sold off, in case it is necessary to clear debt.
