27 Aug Acting as Guarantor – What should you do?
It is common for young people starting out in life to ask parents or close family to guarantee a loan for a home, new venture or business. While loan institutions or banks recommend that you take legal advice it seems that many fail to do so and often do not really understand the full obligations of such a guarantee.
Life situations can change and many of these changes are unforeseen. For example, a couple may separate, a business may fail to produce the desired results, there could be a death, or financial circumstances could change as a result of the loss of employment. These circumstances could result in a default on the loan and as guarantor you may have put your life savings, assets or home at risk.
It is important that you completely understand the impact of any guarantee that you sign and you should ensure that if something occurs you are able to with stand the fall out.
The reality is that Banks want to lend money and charge interest for the loan, so if they insist on a guarantor, there may well be a good reason for this. In such circumstance consider your current situation, insist on legal advice, consider limited guarantees or perhaps an equity in the business. There are many options available to you that you could consider.
To discuss any legal matter relating to becoming a Guarantor please contact our friendly and approachable legal team.