Can I Get a Loan with a Friend As A Guarantor?
Homebuyers who don’t qualify for a home loan on their credit, benefit from a guarantor. Keep in mind that lenders have requirements for qualified guarantors too. It’s possible to obtain a loan with a friend as a guarantor, but it’s difficult.
Instead, lenders prefer parents are guarantors for young homebuyers. A family tie matters in this situation. Parents want their children to have families and own homes. Thus they remain personally invested. Plus many parents have lived in their homes for several years. In many cases, the home has no outstanding mortgage anymore. This means that no third party exists in the transaction.
Other guarantors lenders will consider include adult children, spouses, and de facto partners. With an exception, lenders will also consider siblings, grandparents, and step-parents.
It starts getting tricky in this area, but step-siblings and step-children are two more guarantors the lenders will consider.
In some circumstances, lenders accept aunts, uncles, and cousins as acceptable guarantors too.
Work colleagues, associates, and friends do not fall into acceptable guarantor territory. It’s too much risk, even for a business loan. If the homebuyer fails to repay the loan, the next in line to repay the debt is the guarantor. A guarantor who has no kinship to the homebuyer is less likely to follow through on the commitment.
Loan with a Friend as a Guarantor Conclusion
A homebuyer can try to obtain a loan with a friend as a guarantor. It’s better to opt for a family member. A guarantor provides their home as security against the mortgage. The action increases the applicant’s borrowing capacity and the likelihood of obtaining the mortgage.
For more information, contact our Mortgage House loan specialist team.