Thinking to Be a Guarantor For Home Loan? Check the Implications First

A home loan is a long term commitment. Most lenders offer a repayment term of up to thirty years. However, for smooth processing of the loan application, lenders want a guarantor who acts as a cushion in the case of a default.

If you are planning to be the guarantor for a home loan, you need to know the implications and rules first. This article contains everything you need to know as a guarantor for a home loan and how a home loan calculator can help you.

Thinking to Be a Guarantor For Home Loan? Check the Implications First

What is The Process of Home Loan Guaranteeing?

A borrower uses a home loan calculator while calculating the loan EMIs, before applying for a home loan. After the loan application gets submitted, the lender evaluates the borrower’s profile and requests the borrower to rope in a guarantor who will undersign the loan document. A borrower needs a guarantor when the amount is massive, the borrower has a low credit score or bad credit history, or their income is below the minimum threshold level.

What Are The Implications of Signing as a Guarantor?

As a fact, when a borrower uses a home loan calculator to calculate loan costs and avails loan from a lender offering low rates of interest, the chances of default are less. However, there may be some unfortunate cases where the borrower is unable to repay the loan. The role of the guarantor becomes paramount in such instances. The following are the implications of being a guarantor.

Take Up The Responsibility For Repayment in The Case of a Default

A prime responsibility of the guarantor is to repay the loan in case the loan applicant defaults. The EMI of a home loan depends on the interest rate. When the home loan interest rate is high, the EMI will also be high, making it impossible for the borrower to continue timely repayments. Usually, the lender sends reminders and notices to the borrower several times before asking the guarantor to repay. Hence, before signing the loan application as a guarantor, ensure that the borrower has enough resources to pay the EMIs on time. You may use a home loan calculator to verify the loan amount and to check whether the EMIs are feasible or not.

Stay Alert Through the Loan Term

When you sign a loan application after using a home loan calculator and evaluating its feasibility, the lender assumes that you know the terms governing the loan. When you take up the role of a guarantor, you have to remain a guarantor for the total duration of the loan. For instance, if the borrower opts for a home loan with a thirty-years repayment term, you will stay as the guarantor for the entire duration. Hence, you need to remain alert to ensure the borrower is repaying on time.

Your Credit Score May Be On The Radar

As a guarantor, any default by the borrower will also reflect on your profile. If the borrower skips a payment or stops paying permanently, your credit score may head downwards. Additionally, lenders may bar you from availing additional loans. Hence, you should check your credit score often to evaluate the impact of being a guarantor.


As a guarantor, you play a crucial role in fulfilling someone’s housing dreams. However, generosity must not come at the cost of reputation. Check the borrower’s financial credibility before signing on the dotted line. You may also take the help of a home loan calculator to suggest the right loan amount, as the right loan amount, coupled with the lowest home loan interest rate, can minimise the chances of default.

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