What is a guarantor?

A guarantor is a person—often a family member or close friend—who legally agrees to pay a tenant’s rent or cover damages if the tenant fails to do so. They provide security to landlords, especially for students, young professionals, or those with limited credit history. A guarantor must typically have good credit and stable income.

Who is considered a guarantor?

What does being a guarantor mean? Being a guarantor involves helping someone else get credit, such as a loan or mortgage. Acting as a guarantor, you “guarantee” someone else's loan or mortgage by promising to repay the debt if they can't afford to. It's wise to only agree to being a guarantor for someone you know well.

What qualifies as a guarantor?

A guarantor is someone who agrees to pay your rent if you don't pay it, for example a parent or close relative. If you don't pay your landlord what you owe them, they can ask your guarantor to pay instead. If your guarantor doesn't pay, your landlord can take them to court.

Do guarantors get credit checked?

Guarantors can be people like your relatives or close friends, but they do not have to be. Landlords and agents often check your guarantor's credit history, income and money. They might also ask for references. They might say your guarantor must be a homeowner.

What does being a guarantor do?

If the borrower defaults on payments, the guarantor is legally responsible for the guaranteed portion of the loan. In case the loan is unpaid, and the bank takes action, it can impact the guarantor's credit score. A guarantor may reduce their borrowing capacity and reduce their ability to apply for a new loan.

What is a Guarantor?

How much money does a guarantor need?

There's no specific amount a guarantor must earn. The important thing for lenders and landlords is your guarantor can meet any repayments. This doesn't necessarily have to come from income. The money could come from savings or property assets.

Can I use a friend as a guarantor?

Your guarantor can be a friend, neighbour, co-worker, or even a family member as long as they meet the criteria. For child passport applications, a guarantor must know the child and their parent or guardian for at least two years.

Do guarantors have to give bank details?

Requirements to Be a Guarantor

These can vary, but commonly include: Financial Stability: A guarantor must demonstrate a stable income, often requiring proof of employment and salary details. Landlords may request payslips or bank statements as evidence.

What is the minimum credit score for a guarantor?

Landlords need to be sure their guarantors are financially sound, which is why they often require them to have a high credit score (typically 700 or more) and an income of at least 80 times the monthly rent.

How do I protect myself as a guarantor?

Things to think about before being a guarantor

1. Understand the risks.
2. Think about how you would cover repayments.
3. Make sure the borrower can afford the payments. ...
4. Put some money aside as a 'just in case' fund. ...
5. Read and understand all the documents before you sign.

What proof does a guarantor need?

Documentation and Verification: Guarantors must provide necessary documentation, including income proof, identification documents, and credit history, to support the loan application process. Lenders may also conduct a thorough background check and credit assessment on the guarantor to evaluate their creditworthiness.

Who is allowed to be a guarantor?

You only need a guarantor if you're applying for a passport for the first time or you aren't eligible to renew your passport. As long as they meet these requirements, your guarantor can be anyone, including a family member or member of your household.

Can my retired parents be guarantors?

Can a parent be a guarantor if they are retired? In most cases, yes. Your guarantor is likely to secure your mortgage through savings or property, meaning that their employment status or income should not have an impact.

Who should I put as a guarantor?

This person should have a strong income and credit score, as they are assuming the responsibility for the tenant's financial obligations if they cannot meet it. Often, this guarantor is someone close to the tenant, such as a parent, spouse, or close friend, explains Stutts Properties.

What are the alternatives to a guarantor?

Unlike a guarantor, a cosigner is treated as a tenant—even if they don't live in the apartment. This means they are equally responsible for ensuring rent is paid on time and may also be liable for other lease obligations, such as damages or fees.

What is the lowest credit score to rent a house?

Many landlords consider a credit score of 600 or higher as acceptable, but requirements can vary widely depending on the landlord, property type and location. Understanding where your credit score generally falls on a scale can help you anticipate whether your rental application may be approved.

How much can I borrow with a guarantor?

Typically there is no different maximum loan size that applies to a guarantor home loan. You can actually borrow up to 110% of the purchase price of a property with a guarantor home loan. This means you can borrow the entire purchase price plus other upfront purchase costs like stamp duty and conveyancing.

What are the risks of being a guarantor?

You are potentially responsible for:

• any rent money owed (you may hear this called 'arrears'),
• the cost of putting right any damage to the property, and,
• any other costs that the tenancy agreement allows the landlord to charge the tenants as a result of them not complying with the tenancy agreement in some way.

What checks are done on a guarantor?

Very much the same checks as are carried out on the tenant. A landlord or their agent will check the guarantor's credit rating, employment status and carry out an affordability check. Typically, a guarantor will need to earn at least 3x the annual rent.

Can you be a guarantor without knowing?

Lenders cannot impose the responsibilities of a guarantor on someone who has not consented to or signed the necessary documentation. If a lending company falsely claims that someone is a guarantor without their knowledge or consent, the affected individual has legal remedies.

Does being a guarantor hurt credit score?

Yes, being a guarantor can significantly affect your credit score, primarily through soft checks when applying and hard hits if the borrower misses payments or defaults, as you become legally responsible for the debt, making the loan appear on your credit report and potentially reducing your ability to borrow. 

What if I can't find a guarantor?

You may be able to persuade your landlord to waive the need for a guarantor by offering them a larger deposit or 6 months' rent in advance. This may give them the greater sense of security they are looking for.

Can a sibling go guarantor?

A loan guarantor under the Family Security Guarantee may be a parent, legal guardian, sibling, or child aged over 18. It's a big decision to make, so check they understand the benefits and risks, and ensure they're confident about their current and future financial situation (and yours).