Would standing guarantor affect
my home loan application or eligibility in future in any way? If so, how?
Yes, it will, when you agree to
become a loan guarantor for someone, your loan eligibility gets reduced. If you
are a guarantor for someone, the bank usually reduces your eligibility to the
extent of guarantee you’ve stood for since that liability can be shifted to you
in case of default by the original borrower. Most banks and financial
institutions look at the loan that you are a guarantor for as a loan that you
hold. They will, therefore, deduct that much amount from your loan eligibility
value when you apply for any loan.
How do banks verify such
aspects about a loan taken or a person having stood guarantor?
Banks will check with the
Credit Information Bureau India (Cibil) records, which will show the home loan
for which a person was a guarantor. Banks also will look into the income to
obligation ratio of the guarantor, which takes into account the net salary and
the sum total of all the installments for loans he has taken. If both (the
primary borrower and his own) loans can be paid off comfortably then the bank
may approve a loan to the guarantor, otherwise no.
What are the norms that would
affect new loan eligibility?
If income to obligation ratio
is 50-60 per cent, banks approve the loan. For example, if the guarantor’s net
salary is Rs. 1 lakh and Rs. 50,000 – Rs. 60,000is the sum total of all the
installments for the loans he has taken or guaranteed, then a bank can give him
a loan. In case the borrower does not pay up his equated monthly installments
(EMIs), the bank issues notices simultaneously to both the borrower and the
guarantor.
How can one decline to stand
guarantor without offending the applicant requesting?
Normally, a guarantor cannot
revoke his guarantee. However, if the primary borrower agrees to substitute the
guarantor with someone else, the old guarantor can revoke his guarantee.
