Guarantor - Person providing security for finance
A guarantor provides security for another's finance, be this through cash or providing the lender with additional security. For an UK mortgage when a buyer can not borrow enough to purchase the property they want someone can act to pay the rest of the mortgage, or act has security on the reminder of the mortgage.
A guarantor undertakes that he will repay a debt incurred by another person to a creditor if that person cannot or will not pay their indebtedness.
Guarantor Example - First Time Mortgage
A consumer after their first home and so their first mortgage are called first time buyers. There are first time mortgage packages available that are aimed at buyers new to the complexities of the property market. But often nowadays due to the increasing house prices a first time buyer may find lenders unwilling to lend them a 100% mortgage loan perhaps because of a bad credit rating. In this case the buyers parents could become guarantors on their mortgage loan and thus enabling them to step on to the property ladder. Or the buyers parents could look at equity release to raise the shortfall in funds required from their own properties equity.
Guarantor Information
In the case of co-guarantors each guarantor will be fully liable for the total outstanding amount. It is up to the guarantors to resolve their respective obligations between themselves. When becoming a guarantor remember you are fully liable for the outstanding amount, so caution is advised before agreeing to help finance others.