When you take a mortgage you are undertaking to pay the interest and/or capital back to the lender (mortgagee) in accordance with pre-agreed terms and conditions. Of course, many of the terms and conditions are ‘standard’ and set out by the mortgagee in the mortgage agreement. The interest rate payable and the repayment schedule will be set with reference to the applicant’s age, income and credit rating, to name just a few of the primary criteria.

Of course, sometimes a purchaser might not be able to fulfill all the lending criteria set out by the lender. In such instances, a close member of the family, might be willing to stand alongside the borrower and effectively underwrite the borrower’s liabilities under the loan agreement.

Offering to be a Guarantor on a mortgage agreement should not be entered into lightly. If the borrower defaults in their payments or otherwise breaches the terms of the mortgage agreement, the lender will soon be looking to the Guarantor to step in and take over the obligations in accordance with the Guarantee Agreement.

We would always recommend all parties take legal advice before entering into such an agreement.

Most Guarantors are parents of young people, stretching themselves in order to buy a home early in their careers. It is perhaps wise for both parties to fully consider the impact on their personal relationship such an agreement might have should the mortgagor (another name for the borrower) suddenly find themselves unexpectedly out of work through illness or redundancy.

Contact us to find out more about how we can help you secure loan terms that best suit your personal circumstances.

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