Partners should think very carefully before guaranteeing a loan. If you guarantee your partner’s loan this will mean that you are responsible for the repayments of the debt if he or she defaults. If the borrower fails to repay the loan then you as guarantor may end up with a bad credit record and possibly lose your home or other valuable assets.
What is the benefit of guaranteeing a loan?
Being your partner’s guarantor provides little benefit. You do not have any rights to own the property or items purchased with the loan. You do not receive a good credit record if they repay the loan. If you give up the title deed to your property to be your partner’s guarantor, you may not be able to use your home as security for your own loan.
What to consider before being a guarantor for your Partner’s loan?
Some important questions to consider before taking on any financial responsibility which are not solely yours include:
- What are my financial responsibilities in this agreement?
- What is the minimum amount I may be required to repay?
- What are the benefits for me?
- What circumstances could stop the borrower from repaying the loan?
- Are any of your personal or joint assets put up as security?
It is important that you obtain independent financial and legal advice prior to becoming a guarantor, because in most cases it is difficult to get out of a loan contract.
If you need any legal or financial advice in regards to becoming a guarantor for your partner’s loan, contact the team at The Quinn Group for further information. Call us on 02 9223 9166 or fill out an online enquiry.
