What does Guarantor mean?

A guarantor is a person who actually works as your “backup person” in a loan, meaning that if you default on your loan he takes responsibility to make the payments for you. A guarantor is not easy to find, as definitely no one wishes to take up such a risk, even if there is a close relationship like being family members. Many times, it is the lender who will ask for a guarantor, if he considers that you are a high risk borrower because you have too many outstanding loans.

A lender will usually check all of your incomes, so that he can determine which the amount you should be eligible to receive is, so that you can easily make your repayments. The guarantor too, is getting under the scrutiny of the lenders in terms of income and debts, and he wants to make sure that in case you default on your payments for one reason or the other, the guarantor has the financial possibility of paying the mortgage off in your place.

Sometimes, this involves that if there is no sufficient income the guarantor can make the repayments with, his/her rightfully owned property can become the providing resource for the mortgage loan repayment. Bear in mind that such a situation can become a very delicate problem, and unless you are prepared to take full moral responsibility for your actions, do not proceed to contracting a loan which requires a guarantor so as to avoid putting in very difficult situation your family or your friends.