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Guarantors - how do I know if I need one?

What is a guarantor?

In a nutshell, a guarantor is someone who says "I will repay a loan if the borrower can't". A guarantor allows the equity in their own property to be used as additional security for the borrower's loan. The lender will also take a mortgage over the guarantor's property - this mortgage will not support the loan directly but will be used to support a guarantee from the guarantor.

Why would I need a guarantor?

In most cases a guarantor will not be required but, you may need a guarantor if, for example, you don't have enough deposit or your lender has concerns about you servicing the loan. A guarantor allows the equity in their own property to be used as additional security for the borrower's loan. The lender will also take a mortgage over the guarantor's property - this mortgage will not support the loan directly but will be used to support a guarantee from the guarantor.