The mortgage with guarantor is an increasingly used solution by young people, atypical workers, and families who have good prospects but not a completely solid income profile.
The guarantor helps the bank reduce risk and allows you to obtain the mortgage even in situations where the application would be rejected.
What is a mortgage with guarantor
It is a mortgage in which a third person, called the guarantor, undertakes to take over the payments if the borrower is no longer able to pay the installment.
The guarantor does not become the owner of the house, but takes on a financial commitment that is often very significant.
Who can be a guarantor
Generally, the guarantor is a family member:
Parents
Brothers or sisters
Spouse or partner
In some cases, even third parties with a stable income
The main requirement is to have a solid financial situation, that is:
stable and sufficient income
low debt exposure
good credit history
When a guarantor is needed
The guarantor may be required when:
The applicant's income is too low
The contract is fixed-term
High amounts are requested (e.g. 100% mortgage)
The installment/income ratio exceeds the bank's limits
There are imperfect credit records
The applicant is young and does not yet have job stability
Types of guarantee
1. Personal surety
The guarantor covers all installments in case of default.
2. Limited surety
The guarantor is liable only for a limited amount or period.
3. Co-ownership of the mortgage
The guarantor becomes a co-borrower, assuming full responsibility.
Risks for the guarantor
✘ May be called upon to pay the mortgage
✘ Their creditworthiness may worsen
✘ May have difficulty obtaining future personal loans
Advantages for the borrower
✔ Greater chance of approval
✔ Access to higher amounts
✔ More favorable conditions
✔ Suitable for young people and families
Conclusion
The mortgage with guarantor is a valuable support, but requires a lot of awareness. It is essential that it is guaranteed only by those who have financial stability and fully understand the risks.
