Who can be a loan guarantor? Who is the right resident?
Loan guarantee is a relatively common phenomenon. This is not surprising, considering that more and more people are having trouble obtaining sufficient creditworthiness on their own. In some cases, a guarantee may be unconditionally required, in others – to increase our chances of getting a loan or allow us to receive it on better terms. It is therefore worth delving into this topic. Even if we never need a guarantor ourselves, we may be asked by someone to become him. In that case, who can be the loan guarantor? What does it look like in terms of housing loans? Do you need citizens for a mortgage or can you get it even without them?
Who is the loan guarantor?
Before answering the question of who can be a loan guarantor, it is also worth systematizing knowledge about who the loan guarantor actually is (often also called a resident). Is a person who certifies to the bank that the potential borrower is a trustworthy person who will pay his debts on time. More importantly, he also declares that in the event of a delay in repayment of the loan, the bank will be able to file claims against it. The very fact that someone is willing to risk their assets suggests to the bank that the person will do everything to pay the debt on time.
After all, who would like to lead to a situation in which a loved one really has to start paying off our loan? You become a guarantor by signing a surety agreement in the presence of a bank representative. The function of the guarantor is regulated by law by the provisions of the Civil Code, to which each party must comply: a resident, borrower and lender. Formally, there are no specific requirements for guarantors. They must be adults who can identify themselves with adequate financial capacity. In this way it is certain that they will be able to repay the guaranteed loan if the need arises.
Who can be a resident?
We already know what he is, but who can be a resident? There are no detailed requirements for guarantors as to what relationship they can or must have with the borrower. In theory, nothing prevents him from becoming a completely stranger to the borrower.
In practice, you are most often asked to become a resident of a family member, partner or close friend. This function involves a lot of responsibility and risk, so it’s hard to expect everyone to agree to it. The guarantor must be an adult, with full legal capacity. We meet this requirement in every bank or institution. We can also meet the upper age limit of the giraffe, but its height is not the same in every case. Obviously, the older a person is, the more risky they are to guarantee their loan.
The most important requirement, which means that despite the best intentions, many people cannot become residents, is having sufficient creditworthiness. How much depends on the loan amount, its length and many other factors. Creditworthiness is the ability to pay a specific liability in a timely manner, including interest, commissions and any additional costs. High creditworthiness is necessary because if the girrant could not afford to pay the guaranteed commitment, then such guarantee has no value. The whole essence of the guarantee is that the resident should be able to easily replace the borrower in paying off the debt. The bank will verify the ryrant in the same way as it verifies borrowers. He will first determine his creditworthiness on the basis of factors such as:
- other financial liabilities
- household maintenance cost
- form of employment.
Each bank has a slightly different algorithm for calculating creditworthiness. Therefore, it is worth checking whether there is a creditworthiness calculator on the website of the institution we selected and using it to calculate whether our creditworthinessis at the appropriate level for this particular bank. The credit history of the potential girrant will also be verified. The Credit Information Bureau will give the bank an insight into whether a person pays off their debts in a timely manner, and if so, with how long delays. This is important because the guarantor has the task of paying back the debt if the borrower is late. The bank will probably not decide to entrust this function to someone who has already had problems in terms of loan repayments. As you can see, the answer to the question “who can be a loan guarantor?” it ‘ s not “everyone”. Quite the opposite – it may turn out to be difficult for us to find someone among our friends and family who first agrees to be a resident, and secondly has sufficient creditworthiness.
What rights does a resident have?
Knowing who can be a resident and what is his main duty (repayment of the loan if the borrower does not), it is also worth knowing his rights. The guarantor can obtain information on the status of the loan from the lender, as well as have access to debt repayment. These rights may come in handy in a situation where the relationship between the victim and the borrower has deteriorated. If there is a delay in repayment, the creditor must inform the guarantor as soon as possible. This cannot lead to a situation in which, for example, he does not know about the delay, and therefore does not repay the debt, which causes accruing of further interest.
Can I withdraw from the guarantee?
It may happen that the guarantor wants to withdraw from his function. For example, because of a bad relationship with the borrower or financial problems, or for any other reason. Is it possible? Yes, when it comes to civil surety, ie the most common one. You can withdraw from such a guarantee, but only with the consent of all parties (ie the bank and the borrower) and provided that the claim has not yet arisen (ie the borrower has not happened to be late with the payment of the liability) .