What is a Guarantor?

Revolut Contributor

 · May 07, 2020  · 05/07/2020

If you are signing a contract to rent a house or apartment, you will in all likelihood need a guarantor. But what is a guarantor, what do they do, and why do you need one?

In this article, we’re going to look at everything you need to know about getting a rent guarantor – or being a guarantor yourself.

What is a Guarantor?

A guarantor is someone who promises to pay your debt – for example, your rent – if you are unable to pay it yourself. Usually, a guarantor is someone to whom you are related, like a parent or family member, but it doesn’t need to be.

What they will need to do, though, whoever they are, is to sign a guarantor agreement – or a “guarantee agreement” – in which they legally declare that they will take responsibility for that debt or rent. If you don’t pay it, then your rent guarantor will be obliged to. If they refuse having signed the form, then your landlord – or whoever else to whom you owe the debt – can take them to court.

As a result, your guarantor needs to be someone willing and able to guarantee your payment. This is why many landlords or estate agents set quite strict rules on who can be a guarantor. And this is why your guarantor will usually be someone quite close to you, as they have to be ready for the responsibility.

Who Can Qualify as a Guarantor?

In the vast majority of cases, you will find the same basic requirements for being a guarantor. At a minimum, these will be the following:

  • They are an adult and can legally accept such responsibility
  • They are a UK resident (although this is not always necessary)
  • They can prove that they can repay your rent – either in salary or savings
  • They have a good credit score

Some letting agencies or landlords set strict rules on your guarantor’s earnings, usually as a percentage of the sum required in rent. They want to see evidence that your rent will be covered.

Does a Guarantor Have to be Working?

Usually, your guarantor will need to be employed. However, this is not necessarily true in all circumstances: it will differ from estate agent to estate agent or between landlords.

If your desired guarantor is retired, say, you might be asked for more information as to their financial capabilities. If someone can evidence that they can cover your rent, that is usually sufficient.

What Checks are Done on a Guarantor?

Landlords might want to perform a credit check on your guarantor, or they might require that a rent guarantor presents proof of earnings or income enough to cover the rent.

Whilst this does not happen in every circumstance, do be aware that it is possible – and your ability to rent might be contingent upon this. It is not advised to just “write down anybody” if they don’t have a good credit history themselves, say. You may well be found out.

What If You Cannot Find an Appropriate Guarantor?

There are a number of reasons why you may not be able to find a rent guarantor. You may have just moved to the UK from abroad, for example, in a situation in which many landlords specifically request a UK guarantor.

In these cases, you may be asked to provide extra rent upfront. Or, if you cannot find a UK guarantor, further information on the financial capacities of a foreign guarantor.

Do not be surprised if landlords refuse the latter option, however. Alternatively, the UK charity, Shelter, has a database of services that can help you rent without a guarantor.

Another Guarantor Meaning?

It would not be correct to define guarantor only in relation to rent. Instead, guarantors are often required for loans and mortgages, as well as for other moments when you might take on debt.

In these cases, your guarantor will need to fit the profile outlined above too. They’ll need a good credit score and evidence that they can cover whatever repayments for any loan you are taking out.

Summary

Having a guarantor is really important if you want to rent or take out a loan or mortgage. But whilst finding someone who is willing and able to have your back financially is crucial, do ensure that they know what they are getting themselves into too.

Being a guarantor does not just involve signing a form. Rather, they are legally obliged to pay your rent if you cannot.

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