Responsibilities of a mortgage and rent guarantor
Many mortgages have the figure of a guarantor, a person who performs a security function to demonstrate to the bank that he can pay the loan. But what are the roles and responsibilities of a mortgage guarantor? And a rental guarantor?
Indeed, an endorsement is a figure allowed both to rent and to apply for a mortgage.
What’s more, with the increase in non-payment of rents during the coronavirus or Covid-19, many owners and owners used this option to sign a contract.
Responsibilities of a rental guarantor
The rental bubble has raised the price of bonds that many owners, in addition to requiring two to three months of deposit, also ask for extra security with a guarantee.
This guarantee is the one offered by the guarantor, a figure rarely seen in recent years. However, nowadays the people who resort to a guarantee are greater.
Next, we cite you what are the functions and responsibilities of a guarantor when renting:
The first thing is to define what a guarantor is, a guarantor is defined as:
“A person who agrees to pay his rent if another person does not pay it, for example, a parent or close relative. If you don’t pay the owner what you owe him, he can ask your guarantor to pay instead. “
To be a guarantee, you must sign a contract that makes you responsible for legal obligations. These are the following:
The guarantee obligation lasts as long as the creditor’s debt (rent) lasts.
If the debt cannot be settled, the guarantor takes charge of it.
Once the rental ceases to exist, there is no legal responsibility or commitment on the part of the guarantee.
A collateral can be both a person and a physical asset. An example, parents can go as collateral if they have a property with which they respond to the bank.
The bank can request a financial guarantee if the loan or contract requested is not sufficient. This will depend on the amount borrowed and on having a good credit history.
A guarantor will also cover outstanding costs that the rental applicant does not meet and are signed in the contract or agreement.
The guarantee responds as the main debtor. That means you are forced to pay off your current and future assets.
Being a guarantor can be a problem since it still causes us problems when requesting credit for us. Not because of default, but because the credit burden is too great.
While it is true that being a guarantor can have some risk, there are ways to minimize it. For example, negotiating with the bank that the guarantee of the debt is liquidated when reaching a certain amount.
It can also be agreed upon reaching a date close to the end of the rental. Or negotiate part of a 2-month bond payment and the signature of the guarantor.
Another option is to use the limitation of liability and even add multiple endorsements.
That is, use the figure of what is called “common or joint responsibility” which means that each guarantee is responsible and responsible for the part that corresponds to the rent.
Finally, add that any owner can consider the possibility of offering a tenant to resort to the benefit of a guarantee to guarantee the payment of any possible claim.
This guarantees the signing of the rental contract and offers legal and legal security to the owner as it is covered by two parties (the tenant and the guarantor) at the time of leasing.
Responsibilities of a mortgage guarantor
Although it is true that there are not many guarantors when it comes to renting if there are more when buying a home
A clear example is young people who want to buy a home and do not have enough funds.
To do this, they turn to their family so that their parents sign the mortgage and they go as collateral.
And is that a home is one of the most important investments in our life and for this we must resort to a mortgage.
To fully or partially cover the mortgage, many couples and young people use their parents or family as guarantors since they cannot take care of the total loan.
Especially if they are large quantities. If we take into account that the average mortgage in Spain is 150,000 euros at about 25 or 30 years, this means a monthly payment of 500 euros each month, approximately.
Getting to cover these amounts is not so easy, especially in a recession like the current one.
Fortunately, the figure of a guarantee solves the problem of having to request different loans and helps to request a larger amount in case of need.
This is quite useful if you need to apply for a total mortgage, think that banks do not usually grant mortgages higher than 80% of the cost of the property or home.
For this reason, many people turn to an endorsement. In the same way that rental guarantors have obligations
The same is true of mortgage guarantors.
These include the following:
An endorsement must cover all the expenses that the mortgage applicant cannot bear. These or costs must be specified in the contract signed by both parties.
There is the possibility of limiting the liability for non-payment by stipulating it in the contract. To do this, the amounts, interests and minimum commissions that must be covered must be established and that once paid, exempts the guarantor from the rest.
A guarantor is obliged not to misrepresent or omit any fact that is required to be declared at the signing of the contract.
Unless otherwise provided, a guarantor is bound and responsible for all terms, conditions, and provisions of a mortgage.
The guarantor is transferred to the descendants even if the original guarantor dies.
In short, the figure of a guarantor is a huge responsibility and must be used with great care.
For this reason, experts recommend being careful when providing this service, especially when renting.