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Do You Need a Guarantor for Mortgage Loan?

The mortgage loan, more commonly known as the loan against property, is a type of secured loan. In order to avail this loan, you will have to pledge your asset as collateral to the lender. The funds for this loan are sanctioned against a fixed asset like a plot of land, commercial property, or a house.

The lender holds on to your asset as collateral until you repay the total loan amount. With a high-value property in hand, it is not mandatory for you to have a guarantor for loan against property. However, in case you want to apply for the mortgage loan with a guarantor, here is what you should keep in mind.

Who Can Be a Mortgage Loan Guarantor?

The guarantor for loan against property functions as the co-signer for your loan. To be eligible, your guarantor has to be an Indian resident who is over 18 years of age. You can ask any of your friends or relatives to be a guarantor for you, provided they have a good financial standing.

This is because with a mortgage guarantor in tow, the lender will treat their finances as security. This means, in instances where you fail to make payments on time, the guarantor is responsible for making these payments.

What are the Conditions Under Which You Will Require a Guarantor for a Mortgage Loan?

The mortgage guarantor works as your aid, supporting your loan application for a loan against property. However, considering that it is a secured offering, the need for a guarantor only arises under certain cases. Firstly, if you are borrowing a loan that exceeds a certain limit as per your lender’s policies then you will require a guarantor.

Secondly, if your financial standing is not up to the mark, and you have a low credit score, then applying for the loan with a guarantor may be required to access the sanction. Thirdly, if you are approaching retirement then applying for the loan with a guarantor will help you win your lender’s trust.

What Kind of Mortgage Guarantor Do You Need for Your Loan Against Property?

In financial parlance, there are two types of guarantors:

  • One who is a financial guarantor
  • Another who is a non-financial guarantor

Generally, for a mortgage guarantor you will need a non-financial guarantor, unless you are borrowing a very high sum that exceeds your property valuation and lender policies. The non-financial guarantor for loan against property is someone who certifies your credibility for the loan.

In any case, the financial guarantor will have to submit their financial documents and take 100% responsibility of loan repayment in case you fail to do so. Thus, it is better to take a very close relative, your spouse or children to be a financial guarantor for loan against property as they will be prepared to share the burden of your loan with you if the need arises without any hassle.

Irrespective of whether you apply for a loan against property with a guarantor or not, you will have to qualify for it by meeting the loan against property eligibility terms. They are as follows.

  • Applicants must be between ages 25 and 60 years
  • Applicants must maintain a steady and regular source of income
  • Applicants must have work experience at a reputed organisation for at least 3 years or have business vintage of at least 5 years
  • Applicants must have a CIBIL score of 750, or higher
  • Applicants must have a stellar credit history
  • Applicants must pledge an asset approved by the lender

Once you are ready with the necessary documents to prove your eligibility, be sure to apply for the Bajaj Housing Finance Loan Against Property. It features a sizable sanction, attractive loan against property interest rates and a lengthy tenor that ranges up to 18 years. For a hassle-free experience, all you have to do is apply online by filling the easy form with basic details.