What if a guarantor refuses to pay?
Quite simply, if a guarantor can technically pay, but decides they will not pay it for whatever reason, they are breaking the contract that they signed.
Collateral may be taken into account if the guarantor will not pay up what is due – or the lender may have a claim in their estate.
What happens if a guarantor dies?
If the Principal Debtor defaults on the loan, the debt becomes the Guarantor’s responsibility, and it could mean the Guarantor may have to sell their own home to service or clear it. In the event a Guarantor dies during the term of the guarantee, the debts do not die too.
Can you get out of being a guarantor?
Unfortunately, if you have signed the loan agreement and the loan has been successfully paid out, you cannot stop being someone’s guarantor. Nonetheless, once you are their guarantor, you cannot change this.
Does a guarantor have to be working?
A Guarantor must be working AND a homeowner. This is because they need to be able to afford the rent as if they were paying it anyway. It is also important to note that your Guarantor must earn at least 30x the monthly rental income per annum.