Deciding to be a guarantor for anyone is a big decision and not to be taken lightly as if the guaranteed borrower cannot meet his repayments, the lender will come after the guarantor’s security for the guaranteed amount. It’s always recommended to seek legal advice when reviewing the guarantee documents before signing it.
That being said, you’re only guaranteeing up to 20% of the loan amount and not the entire home loan amount in what’s known as a limited guarantee guarantor loan. You can use our guarantor loan calculator to work out what the limited guarantee will be for you.
The Banking Code of Practice (the Code) sets out the standards of practice and service in the Australian banking industry for individual and small business customers and their guarantors.
Under the 2019 Banking Code of Practice (the Code) effective 1 July, guarantors must:
- Be given a minimum of 3 days to review the guarantee documents.
- Be encouraged to seek legal advice before signing as is currently the case.
- Have a cooling-off period after signing the guarantor agreement.
- Be notified if the guaranteed borrower’s financial situation changes and he/she cannot meet their repayments.
- It is only after the bank has exhausted all avenue of recouping their investment that they can start action against the guarantor.
We specialise in guarantor home loans.
Give us a call on 1300 889 743 or fill in our free assessment form to discuss your situation.
Cheers,