Lenders try to minimise the risk of default and in some cases require additional collateral in the form of a guarantor. A guarantor is a person who gives a written undertaking to a bank or other creditor to settle a debt if the borrower cannot or will not repay it himself. Unlike a co-borrower, a guarantor is not a co-obligor and is only approached by the creditor when recovery of the debt from the debtor is unsuccessful.
Requirements for guarantors
Not every person can be a guarantor. The basic condition is that the person must be of legal age and the bank must also accept the chosen guarantor. Also, a person who has outstanding debts or is even under execution cannot become a guarantor. Banks assess the guarantor in a similar way to the borrower himself. They try to find out as much information as possible about the borrower’s payment record and usually consult both bank and non-bank registers. If you become a guarantor, expect that you may have trouble getting your own mortgage.