Guarantor

Someone who agrees to pay if you don’t. Usually a parent or relative. If they do pay, they acquire rights to sue you personally.

A guarantor undertakes that he will repay a debt incurred by another person or company to a bank or other creditor and the bank or other creditor can require him to pay the outstanding amount if that person cannot or will not pay their debt. If you are having trouble finding a mortgage lender willing to lend as much money as you need, either because your salary is low, you already have a lot of debt or you're buying in a expensive area, you might find they become more amenable if you come up with a guarantor. This is then a guarantee that if you default on your mortgage, your guarantor will make the mortgage payments, eventually clearing what you owe.

Once the deal has been signed, your guarantor is legally bound and they can be made to pay out at any time during your mortgage term even if it means selling their own home. Your lender is unlikely to agree to release them unless you find an acceptable replacement, or your salary or the value of your property has risen significantly. It is most usual to ask a parent, but any relative or even a long-standing friend can act as a guarantor. To be acceptable to a lender, they must prove they have enough disposable income, after paying their own debts, to afford your monthly repayments too. If you are thinking of agreeing to be a guarantor, think carefully. The best advice is don’t unless you are very, very sure of the person you are being asked to guarantee.

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