Things to think about if you are asked to give a guarantee
Advice to prospective guarantors
Are you being asked to be a guarantor?
There are many reasons why family members are asked to be a guarantor. Most often it is when your kids are moving on in life, such as renting their first flat, getting a bank loan for a car or a small business venture of their own.
It’s very difficult to say no, but if there is a way to avoid giving a guarantee, it’s a good idea to take it if it’s a practical alternative. The reasons are obvious: a guarantee means you stand in the shoes of the person who has the principal liability, so if they don’t pay as and when they should, or if it’s a tenancy, and they allow the flat to be damaged, then you will be 100% in the frame.
If you have to say yes then try to minimise the risk. For instance:
- Can you get a maximum cash limit on the guarantee?
- Can you get agreement that you will be told at once by the person to whom you have given the guarantee, if they think things are going wrong?
- If the first rental is a shared flat or house, are all the other occupiers having to provide a guarantor and, if they are, can your guarantee be limited to your son or daughters fair share?
We can help if you are concerned about giving a guarantee, or have given one and it has not worked out as expected.
Contact us for further information and expert advice