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Mortgage loans, which include both Home Loans and Loans Against Property, are loans of a secured nature and require the pledging of collateral. While a valuable collateral may be enough for lenders to sanction the loan, a guarantor further enhances the quality of a mortgage loan application.

A guarantor, by definition, co-signs the primary borrower's loan application, in effect guaranteeing the repayment of the loan amount, with interest, in case they can no longer pay back the lender. As a guarantor, you bear financial responsibility in the advent of a loan default by the primary borrower.

Prospective borrowers should take note that there are two types of guarantors who can co-sign a mortgage loan application:

  1. Financial Guarantor: This individual agrees to repay the loan amount in case of loan repayment failure
  2. Non-financial Guarantor: This individual vouches for your credibility and application profile

The decision of which type of guarantor may be required depends on the loan application and case scenario.

If a borrower fails to meet the eligibility benchmark of a Loan Against Property, introducing a mortgage loan guarantor may help their case. This is particularly true if the primary borrower is aged and nearing retirement or has a credit score below the eligibility requisite. Here are some conditions that may warrant the need for a loan guarantor: 

  • The primary applicant’s financial standing is not up to the mark 
  • The primary applicant has a high-risk job profile 
  • The primary applicant’s age is close to the maximum age considered at the time of loan maturity 
  • The primary applicant’s loan amount requirement is higher than their repayment capacity 

Just as a borrower has a set of eligibility parameters to meet to be approved for a mortgage loan, a mortgage loan guarantor may also be judged based on the following criteria to add value to the Home Loan application. 

  • Stable income source
  • Strong credit profile
  • Strong repayment capacity
  • Ready assets to serve as collateral

Mortgage loan guarantors must consider every possible loan outcome before they make the decision to co-sign a mortgage loan.

Note: This page is for the purpose for 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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