Buying a home is an exciting milestone, but sometimes securing a home loan can be challenging, especially if you do not meet all the eligibility criteria. This is where a home loan guarantor can come to your rescue. In this blog post, we will provide you with a comprehensive guide on home loan guarantors, covering who can be a guarantor, is a guarantor required for your home loan, other important things to know about using one, and the associated risks.
Before you choose a home loan guarantor or agree to become one, understand that the whole scenario works out only if there is complete understanding and good faith between the lender, the borrower, and the guarantor. At IIFL Home Loans, you get proper assistance and guidance at every step of the way to help you make better decisions. Here are some important questions to ask and things to know about a home loan guarantor.
A home loan guarantor is an individual who takes on the responsibility of repaying the loan in case the primary borrower defaults. A guarantor can enhance your loan eligibility by adding their income and creditworthiness to your application, making it more favourable for lenders to approve your loan.
In India, the criteria for being a home loan guarantor are as follows:
For guarantor loan eligibility, the borrower needs to meet any of the following criteria:
When the required loan amount is higher than what your lender allows
When you have a low credit score or at least lower than what your lender needs
If you do not fall within the acceptable age range
If you cannot establish income stability or have a high-risk occupation
Before involving a guarantor in your home loan, it is crucial to understand what it means for you as the borrower:
Any defaults or delays in loan repayments will impact the credit scores of both the primary borrower and the guarantor. It is essential to maintain timely repayments to safeguard the credit profiles of all parties involved.
Choose a guarantor who has a stable income source, good credit history, and a healthy financial standing. This will assure the lender of their ability to repay the loan if necessary and increase the chances of your loan being sanctioned.
Ensure your potential guarantor understands the legal implications and financial responsibilities associated with being a guarantor. They should be fully aware of the risks involved before committing.
Select someone as a guarantor for a home loan with whom you share a close and trustworthy relationship. It is crucial to have open and transparent discussions about the responsibilities and potential risks involved.
You may want to consider home loan insurance to ensure that your debt is paid out in the event of your death or disability or loss of income. Read more on this at IIFL Home Loans and secure your family’s financial future along with yours.
Now, if you are someone who has been asked by a borrower, you should display some caution before assuming loan guarantor responsibilities. Reach out to IIFL Home Loans or read more on their website to know more about home loans and repayments.
A home loan guarantor can be a valuable asset in securing a loan. There are specific rules for loan guarantors as well as borrowers. Each party should weigh the risks and benefits, communicate openly, and make informed decisions. Remember, seeking professional advice from lenders such as IIFL Home Loans can also provide valuable insights tailored to your specific situation.
You have to fit the eligibility criteria set forth by the lender. You have to establish financial stability, among others. Know that you have to submit the specified documents required for loan guarantors to be eligible.
A co-applicant shares joint responsibility of paying the loan together with the borrower. A guarantor only assumes responsibility should the borrower fail to repay the home loan.
You can remove your home loan guarantor if you have paid off the majority of the home loan and can establish credibility for the remaining tenure. You will need a NOC from your lender stating their release from the role as a guarantor.
At IIFL Home Loans, you need to meet the following criteria:
Nationality - Indian
Age - 18-75 years
Occupation - Salaried or self-employed
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