Disadvantages of Signing as a Guarantor for Loans

 

As much as you will like to help a family member or friend purchase their home under the easiest of circumstances there are a few areas where you have to consider when they ask you to sign as a guarantor. Signing as a guarantor will typically require you to hand over all documents showing all assets that you possess including that which is in your bank account to act a s a collateral for your loved ones loan.

In simpler terms, if you were to sign as guarantor for any ones loans you will need to be aware that if they forego their payments in anyway; you could be liable to pay their debt if such an event arises.

When accepting the responsibility of co-signing for guarantor home loans, you will also need to look in to how well you know the person you are signing for. If you are not that familiar with their spending patterns and how well they manage the finances that they have, it is better for you not to put yourself nor your finances and other assets at risk.

Another area you should consider when signing for guarantor home loans is whether or not the individual that you are signing for is able to make the necessary payments out of his current income. This is the most important factor considering that if any payments are not made on time or not made at all, you will be held liable to match up the amount and make the payments on their behalf to the bank or financial institution you signed with. Moneyshop can provide easy loan application and approval.

Another question you should take into grave consideration before signing any document is whether or not you will be comfortable paying out the individual’s debt, if he or she has ever hit an area where they can’t afford to make payments. If it is immediate family, most individuals will not mind the actual risk. However, if for any reason, you do not want yourself to be held liable or you will not want your assets held as collateral, it is important that you think twice about co-signing on cash loans. This will actually result in you having to make monthly payments for the individual you signed for, till they are able to resume making the payments that need to be made to keep the house.

Not looking into areas such as this will cause you to fall into a great deal of unnecessary debt if the individual finally decides that he cannot afford the loan amount. Not assisting them in this area will result in your credit rating being tarnished as well.