What A Home Loan Guarantor Know?
Home is considered as an invaluable asset by the common man India. The borrower must comprise on his life saving to purchase a home because the real estate prices in India are never in the income brackets of the common man and home loan becomes a mandate for purchasing a home today. These home loans will give instant accesses to funds to purchase a home and the borrower can comfortably repay the loan in easy EMIs over a period of time. If the borrower stands eligible to apply for a housing loan, there is no guarantor required. The lender may ask you for the same if you are looking to procure housing loan with low credit profile, debt history is not clean, employed in a high-risk job, self- employed professional less than pre-determined income level.
In most of the cases, relatives/ friends become the guarantor of the housing finance to help the borrower purchase one. It is important to consider these factors if you are becoming housing finance guarantor. Check yourself by answering these questions before you give a commitment.
You can serve your friend as two types of home loan guarantor. In the case of a non-financial guarantor, you will just serve as an alternate contact number if the primary borrower is not reachable. In the case of a financial guarantor, you will stand liable repay the home loan if the borrower defaults it.
When you are signing the home loan application as guarantor, you should understand that you are obliged to pay the house loan amount along with the interest rate and other fee dues to close the loan. Many nationalised banks implement these rules to minimise the risk they encounter through defaulting loan.
Impact on loan eligibility
When signing the home loan application as guarantor, the lender will treat your liability equal to primary borrower. Any defaults by the borrower will impact your credit score too. Any late payments in the loan will impact your credit score and make you look financially unstable. You may have to suffer your loan eligibility if the borrower defaults the loan.
Tenure of home loan
Guarantor home loan should consider home loan tenure because he/she will be liable to pay the loan till the completion of the loan tenure. After the loan is paid in full, he/she needs to get NOC to get released from guarantor ship from the lender to complete the process.
Know the terms of loan
Considering the terms of home loan tenure is very important when you are home loan guarantor. You need to assess your own financial capability before taking the responsibility of the others. You should figure out the worst and assess your capability to repay the loan in case the borrower defaults the loan. You should consider all terms and conditions of the home loan agreement before signing it.