Things to Keep in Mind Before you Become A Home Loan Guarantor

Becoming a home loan guarantor for family members or friends is a crucial decision that can affect an individual in the long run. Hence, it is vital to consider some essential factors before accepting this offer to safeguard oneself in the future. 

7 Things to remember before becoming a housing loan guarantor

Below are seven things that individuals must keep in mind prior to becoming a home loan guarantor:

1. They must go through all the rules that the financial institution has set for that role for compliance.  

2. If a borrower is unable to repay the loan on time, the credit score of the guarantor also reduces considerably.

3. Financial institutions approach the guarantor to repay the loan in case the borrower defaults. 

4. In case a guarantor, too, is unable to repay the role after the borrower has defaulted, financial institutions will tag them as a ‘wilful defaulter’.

5. Once an individual becomes a guarantor, the loan is reflected in their credit report as well unless the borrower fully pays it off. 

6. Becoming a guarantor can affect an individual’s creditworthiness when they approach a financial institution for a house loan to meet their financial urgencies. 

7. It is essential to check the pros and cons before agreeing to become a guarantor for a friend or family member. 

It is essential to keep these pointers in mind before becoming a home loan guarantor. Additionally, individuals must also check the eligibility and documents required before proceeding.  

Also Read: Use A Home Loan Interest Calculator to Plan Your Loan Repayments