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Home Loan Guarantor: Role and Function_WC

By introducing a Home Loan guarantor to your loan application, you enhance your chances of being approved for your desired Home Loan amount. Despite being a secured mortgage loan, Home Loan lenders give more points to any additional security to your Home Loan application as it minimises the risk factor.

Your Home Loan guarantor isn’t a co-applicant or a co-borrower who splits your Home Loan burden by paying the EMIs. A guarantor steps in when you’re no longer able to keep up with the Home Loan payments and plugs the EMI gap to keep you from defaulting on your Home Loan repayment.

Here are the following application scenarios wherein having a Home Loan guarantor could help in securing better Home Loan terms:

  • When the applicant’s loan amount request surpasses the amount the lender is willing to sanction
  • When the applicant’s repayment capacity may not support their loan amount request
  • When the applicant’s age is close to the maximum age considered at the time of loan maturity 
  • When the applicant does not have a good repayment history

If you would like to volunteer as a housing loan guarantor for an acquaintance’s Home Loan application, here are the two types of guarantors you can be: 

  • Financial Guarantor: In this capacity, you agree to repay the loan amount in case the primary applicant can no longer repay the loan amount 
  • Non-financial Guarantor: In this capacity, you will need to vouch for the applicant’s credibility and application profile

However, it is implied that you will be directly responsible for making the payments should the borrower fail to keep up with their EMI schedule. Hence, you should weigh the pros and cons before co-signing a Home Loan.

  • Your obligations as a guarantor will include repaying the EMIs by yourself in cause the primary borrower is unable to 
  • Your role as a Home Loan guarantor could impact your own eligibility when you apply for a loan of your choice
  • Your obligations as a guarantor will only end once the Home Loan has been repaid in full and you’ve received an NOC stating the same

As a borrower, when you approach someone to be your Home Loan guarantor, ensure that their eligibility is up to mark. Here are some parameters lenders consider: 

  • The guarantor’s income source
  • The guarantor’s credit profile
  • The guarantor’s repayment capacity

Note: This page is for the purpose of generic information. Whether a guarantor is requested in your case will depend on your profile and the lender. 

*Terms and conditions apply

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