Being a guarantor. It’s something every mother or father may face at some point throughout their life. The kids may hit you up to guarantor their loan, especially these days when property is almost out of reach for the younger generation.
Many people don’t fully understand the commitment they are making when they sign the paperwork. Always remember: what ever you are going guarantor for, you are responsible for!
Whilst we never like to think of things going wrong, the reality is they may. We live in a world today where it seems like change is the only constant so we need to walk into these situations empowered and making smart decisions not just emotional ones.
What are you putting at risk if disaster strikes and your child gets ill and can’t work, or loses their job or for whatever reason can’t continue to make the mortgage payments? Are you in a position where this would be a disaster for you or do you have sufficient liquidity to sail through any such storm.
The reality is the mortgage company is making a smart decision they are protecting themselves by demanding a guarantor if they are to approve the loan, why are they worried?
Is the property overpriced and they are concerned it could drop in value, or is it that the deposit is so small that by the time costs are taken into account they couldn’t sell the property to repay the loan?
Buying a home is a big step and so is being a guarantor, do not walk in with your eyes closed and put yourself at risk.
Do the math, gather the intelligence and then analyse the situation, is this good for your child and are you in a position to assist without putting everything you have worked so hard for at risk.
Then and only then make your decision, don’t feel you are letting anyone down if you say No. In fact you are certainly helping them by looking at the facts and making an informed decision and they should respect and learn from that.
Isn’t that what families are really about.
Know of a good or bad experience with being a guarantor please add to the conversation, together we will all benefit more.