If you are planning on acting as a guarantor for someone or perhaps planning to ask someone to be your guarantor when applying for a tenant guarantor loan, consider the following.
One the loan agreement is signed and the money is deposited into a banking account, the guarantor is bound by the contract, and cannot remove themselves from it.
Therefore, choosing the right guarantor is imperative. At Big5 Loanswe pride ourselves on the fact that we go the extra mile to ensure that the applicant and the guarantor they have secured are educated thoroughly regarding the product.
Let’s look at a few common questions we face during this education process.
Why can’t a guarantor be removed?
Well, as someone that has agreed to pay the monthly repayments should the applicant not be able to, the guarantor is crucial in the application process for the loan. That is why we determine if they are fit to act as guarantor by checking their credit history, affordability, age and other factors that determine whether they are suitable or not. For this reason, they cannot be replaced at all, especially as a new person might not have the necessary credentials to act as a guarantor, significantly changing the risk profiles attached to the loan agreement.
Can we replace my guarantor?
No, for all the reasons mentioned above. In some circumstances, the spouse of a guarantor can replace them in the case of a death. This often is a choice that the lender will have to make.
My guarantor wants out! Is there a way?
There is only one way for a guarantor to be released from their obligation – the loan must be paid up in full and the agreement, therefore, terminated. Luckily, by paying a little more than the required monthly premium, it is possible to repay the loan earlier than the terms agreed. Note, you may be charged a slight interest adjustment if the loan is paid off within a certain time frame.
I have an idea! What about more than one guarantor?
Unfortunately, that is not possible. We do suggest that when applying for tenant guarantor loan that you have a few possible people in mind to act as a guarantor in case your first choice is not suitable. Remember to discuss this with them beforehand.