Here at Belvoir Birmingham, we deal with everyone from landlords to tenants. We understand that not everybody has the ability to provide a reference or pass a credit check if they haven’t rented before, so we’re happy to give applicants the option of having a guarantor. Everybody has to start somewhere, and we’ve got a range of options available to first time tenants.
One of the options available to these individuals is to use a guarantor. This gives first time renters the opportunity to get a place to live without having to worry about the lack of finances, stumbling into debt or being rejected for a property rental application and losing money.
Who can be a guarantor?
If you’re the parent or guardian of a child, or have a close friend who’s looking to rent for the first time, then you might want to help them out by being their guarantor. Guarantors generally tend to be close friends or relatives of applicants who are looking to rent but lack the appropriate credit or reference history required. Being a guarantor is a great way to help someone out financially without having to dip your hand in your pocket in providing a personal loan. It’s also a fantastic way to help a friend or relative with their credit score.
Being a guarantor involves signing an agreement form which includes details such as how much the rent is each month, the length of the agreement and the number of people on the tenancy agreement. You’ll also have to agree that your property will be used as security should the applicant fail to make payments. Once you’ve signed the agreement, it’s vitally important that you get a copy of the document, and that you also take the time to read all the small print before signing on the dotted line.
What checks are made?
You’ll need to be able to satisfy certain lending criteria. Firstly, to be considered as someone’s guarantor, you’ll either have a mortgage on a property, or own one outright. You’ll also have to have a good track record with paying back loans and other creditors, as this will satisfy the landlord or agency that you won’t be stretching your current financial situation if the applicant fails to keep up with their rent payments. In order to be a guarantor, you’ll either have to be a close friend or relative over the age of 21. Additionally, you’ll have to provide identification, such as bank statements, utility bills and photographic ID.
What happens if the person I’m guaranteeing defaults on their payments?
You should think very carefully before agreeing to be someone’s guarantor. Although being a guarantor in itself won’t affect your credit score, if the person you’re helping fails to keep up payments, the liability of making the payment will fall to you. You could end up with a default which can appear on your credit file for six years or more for both applicant and guarantor. So before deciding to be someone’s guarantor, you need to be confident that they’ll make regular rent payments until the end of the agreement.
Whilst being a guarantor can carry risks, as long as the applicant keeps up their rent payments you probably won’t even be contacted about the agreement. We would, however, recommend that you regularly contact the applicant in order to ensure that you both understand each other’s obligations regarding the agreement.
Everybody knows that moving out on your own for the first time can be daunting. Being a guarantor can be a great way to help a friend or loved one in the process of getting their own place. If you’d like to find out more about being a guarantor, fill out our form and we’ll get back to you regarding your query as soon as possible.