Have you ever been asked to be a guarantor? Do you know the risks involved? On some occasions, both relatives and friends need a person or entity that becomes a payment guarantee in case they cannot meet their debts after granting a loan. In the following article, we analyze what are the pros and cons of doing it.


What is a guarantor?


By guarantor, we understand that person or entity that is offered as a guarantee of payment in the event that the holder of the loan cannot meet the debt. When a mortgage loan is granted for a significant amount, the entity that offers the financing requests all possible guarantees to recover the money and interest .

The guarantor must show the same economic and patrimonial solvency as the person who is going to receive the money, and in the event that the latter cannot, he will be obliged to deal with that debt. Through the guarantee , the guarantor declares himself willing to meet the commitments of the endorsed.

Commitments and obligations of the guarantor

The main obligation of the guarantor is to meet the commitments of the guaranteed party to third parties. In the event that the latter does not meet the expenses and incurs in non-payment of the debt, it will be the guarantor who has to bear the economic cost.

Before that happens, a process will be carried out by which the inability to pay of the loan holder will be demonstrated, both with his salary and income and with his assets. From that moment on, the guarantor will assume the payment of the monthly installments of the loan, in addition to the default interest that may have been generated.

The guarantor will have the same payment obligations and legal consequences in case of default , this means that he will respond with all his assets, present and future. You respond with the current property and those that are acquired while the mortgage loan of the person you guarantee is in force, although this extreme is not usually frequent.

There are various ways of making a guarantee, and in some only partial responsibility for payment is contemplated. This means that if necessary, the guarantor will have to return a previously agreed amount of money.

It is important to bear in mind that with your guarantee, your solvency will be compromised, since the possibility of having to pay another debt is acquired. This is how the possibilities when managing a mortgage or a loan can be limited.


Who can guarantee a loan?


First of all, the guarantor must be of legal age and must have the same payment capacity as the person to whom the money will be granted. In addition, these requirements are essential:

  • Stable and sufficient income: the guarantor must demonstrate that he has the capacity to pay the guarantor’s fees if the case arises.
  • Few or no outstanding debts: There should be no outstanding debts, such as loans or mortgages.
  • Sufficient equity: unencumbered real estate offers an additional guarantee.

What happens in case of death?


In the event of the mortgagee’s death, if the heirs accept the inheritance, the guarantor maintains the same functions until the end of the mortgage. On the other hand, if the heirs accept the inheritance for the benefit of inventory (they undertake to pay the mortgage with the assets that make up the inheritance but not with their own) and there is non-payment or uncovered debt, the guarantor will be obliged to cover it. 

If the guarantor dies, the heirs will be affected. They will receive the responsibility of facing the mortgage with the inherited assets and their own, both in the present and in the future. Although there is the option of accepting the inheritance for the benefit of inventory.

Can you stop being a guarantor?

One of the big questions that are asked in these cases, can you stop being a guarantor? There are two assumptions by which this can happen, that said loan is canceled by payment or by constitution of a new loan approved by the bank without the guarantor being included. And in the other case, that in a sentence the guarantee is declared null because it is considered an abusive clause.

After the approval of the new mortgage law, it is required that the guarantor be informed of all the details of the mortgage. Both the holders of the future mortgage and the guarantors must go through the notary’s office to receive advice and carry out some procedures so that the notary authorizes the deed.

In short , being a guarantor is an important step with the repercussions that we have mentioned above. For this reason, the conditions of the loan must be perfectly explained and decide if they are assumed as their own if necessary.What