Who can be a guarantor?

Family members are generally the only people who can serve as guarantors. It is usually a parent, but grandparents, siblings, and other relatives can also serve as guarantors. The lenders may allow ex-spouses or extended family to be guarantors, but all lenders have different policies.

Does a guarantor expected to secure the full loan?

No, they do not; limited guarantees are permitted by some lenders. Limited guarantees require the guarantor to secure only a portion of the loan, rather than the entire sum. By doing this, the guarantor will not be liable for the entire loan, so they won't be exposed to unnecessary risks.

Should the borrower be unable to repay the loan, what are the repercussions for the guarantor?

Defaulters can face legal action from lenders and, in some cases, this can even extend to their guarantors if they fail to repay their loans.

In the case of a guarantee specifying an amount, the guarantor is responsible for that amount.

An independent financial and legal advisor should be consulted before signing on as a guarantor on a property loan. The lender will usually insist on this step before accepting the guarantee.

The borrowing power of a guarantor diminishes once they agree to be a guarantor.

What are the steps to get started?

Contacting a team member at GDP Mortgage and Finance can certainly assist you with finding the right home loan solution for your needs. If you contact us, we can provide you with a free, confidential consultation to identify the best solution for your unique situation.

You can initiate the conversation with your family member if you're interested in a guarantor loan. Prior to accepting a guarantor role, it is always advisable to seek independent financial and legal advice.

There are a number of options for you to consider if a Guarantor Loan is not right for you. Please call us or send an email.