The mortgage guarantor is one of the parties to the transaction, with whom a separate agreement is concluded. This concept should not be identified with a co-borrower, since each of these persons involved performs completely different functions in the process of mortgage lending.

Mortgage guarantor: who is it?

The main purpose of the guarantor in a mortgage loan is to guarantee the repayment of the debt. However, he does not have any benefit in making this transaction. A prerequisite for issuing a guarantee is the presence of a confirmed income at a level sufficient to pay the debt.

The guarantor can be:

• an individual (employee, individual entrepreneur, pensioner);
• a legal entity (for example, the company employing the borrower).

Important! If a pensioner is involved as a guarantor, then he must comply with age restrictions. His age cannot exceed the maximum possible mark at the time of the end of payments.

The difference between a guarantor and a co-borrower

A guarantor differs from a co-borrower in the following ways:

1. Type of liability. Co-borrowers, together with the main borrower, are jointly and severally liable to repay the loan. This means that in the event of the first delay, the bank may demand the fulfillment of obligations to pay the debt from the joint and several participants in the transaction. The guarantor pays the borrower's debts only after the latter is declared insolvent by a court decision (subsidiary liability).
2. Ownership. The husband or wife usually acts as a co-borrower, so they, along with the main borrower, are the owners of the purchased housing. The guarantor has no rights to real estate, and, accordingly, unlike co-borrowers, cannot receive a tax deduction.
3. The amount of income and the impact on the amount of the loan. The income of the guarantor is not taken into account when calculating the maximum credit limit, while the solvency of the co-borrower directly affects the final size of the mortgage.

Thus, compared to the co-borrower, the guarantor has a less advantageous position, since he is responsible for repaying the loan, but he does not have any rights to housing.

Requirements for guarantors

In general, banks impose a similar set of requirements on borrowers and third parties participating in a mortgage agreement:

• the presence of citizenship of the Russian Federation and a valid passport (the exception is those banks that lend
• foreign citizens, for example, "DeltaCredit");
• permanent registration on the territory of the Russian Federation;
• age from 21 to 75 - 85 years old inclusive (as of graduation date);
• confirmed income (certificate 2NDFL, in the form of a bank, tax return);
• official employment (confirmed by a copy of the work book or contract).

Banks also set requirements regarding seniority (cumulative and at the current place of employment), citizen status (IP, employee). For bank customers who have payroll cards or deposits, lenders put forward more lenient conditions.

Additionally, the package of documents includes an application form of the guarantor, it can be taken at the bank branch or downloaded on the official website. After the submission of documentation and approval of the application for extradition, a separate suretyship agreement is signed with the guarantor, which specifies his rights and obligations, as well as the degree of responsibility.

Rights, obligations and risks under suretyship

If the borrower is declared insolvent, the guarantor is obliged to repay the debt on interest and the loan amount. It is also responsible for the payment of fines for late payments and the repayment of court penalties.

Important! After fulfilling its obligations specified in the surety agreement, the guarantor may apply in court to the primary borrower for compensation for losses. In this case, the creditor bank must provide all documents confirming the actions of the guarantor.

By agreeing to vouch for a mortgage borrower, a person runs the risk of losing his own solvency. In addition, it faces a number of other potentially negative consequences:

1. Bad credit history. Due to the fault of the borrower, the loan may go into delay, which will be reflected in the credit file of all participants in the transaction.
2. Difficulty obtaining a loan or a new mortgage in your name. When considering a loan application of a client who has a guarantee agreement, the bank reduces its solvency by the amount of obligations under the current loan. For example, in Sberbank, in the absence of delays and sufficient solvency, the current guarantor can issue a new mortgage.
3. The guarantor runs the risk of losing property, which, in case of default, can go to the bank.

Why use third parties

Involving co-borrowers and guarantors can increase the likelihood of mortgage application approval, as well as reduce bank risks . A guarantee, along with a pledge, is one of the forms of securing a home loan. Some banks do not have the possibility of issuing a mortgage guarantee (Rosselkhozbank, VTB Bank). In others, for example, in Sberbank, a guarantor is needed only until the pledge is registered, after which it can be excluded from the transaction.

Important! If the client is not married and has sufficient income, he can apply for a mortgage without the involvement of third parties.

In some cases, the guarantee may be prescribed by the mandatory conditions for issuing credit funds. This is possible with special rules for financing young borrowers, persons of military age, or for a period before registration of ownership.

Is it possible to cancel a guarantee?

There are several cases in which a suretyship agreement can be terminated on the basis of Art. 367 of the Civil Code of the Russian Federation. These include the death of the borrower, the expiration of the guarantee agreement, changing the terms of the loan without the consent of the guarantor (including the replacement of the borrower).

If you need to issue a refusal for other reasons, then in this situation you will need to obtain the consent of the borrower and the creditor bank. In addition, it is necessary to change the guarantor. The new guarantor must comply with the requirements of the bank, and the replacement can be carried out only by agreement of all participants in the transaction.

Guarantee in mortgage lending is an additional form of security for debt repayment. The guarantor, as well as the main borrower, must meet the requirements of the bank and have a stable income, which, if necessary, will make it possible to fulfill obligations to repay the mortgage.

When drawing up a contract, banks often require the involvement of a mortgage guarantor. The presence of a guarantor or co-borrower increases the chances of getting a positive decision. What is the difference between a guarantor and a co-borrower in a mortgage, and why are they needed?

Why do you need a guarantor or co-borrower?

The purpose of any banking institution is to make a profit. It does not represent a mortgage agreement, the interest on which the borrower pays for many years.

Based on the foregoing, it is not surprising that before approving the application, the bank carefully examines the potential borrower for its solvency. In this case, the role is played not only by the amount of salary and other types of income in recent months, but also by the place of work and the time during which the applicant works in this position. To increase the chances of approval of the application and the size of the mortgage provided, the bank may offer (more precisely, strongly recommend) to attract co-borrowers or guarantors.

A co-borrower is an individual (much less often a legal entity) who is responsible to the loan for the return of the issued loan on an equal basis with the applicant.

A guarantor is a natural or legal person who guarantees that the debtor will regularly make payments and fulfill other obligations under the issued loan.

Both parties play the same role - they guarantee the bank the payment of the loan.

Who can be a guarantor and co-borrower on a mortgage

Each bank sets its own requirements for potential guarantors. As a rule, the requirements for it are almost the same as for the borrower:

• age limit. The guarantor must be of legal age (usually 21 years of age), but not of retirement age;
• have a certain level of income, the amount of which is determined individually;
• have a good credit history.

A guarantor can be either an individual or a legal entity. If it is the borrower's employer, then the chances of obtaining permission to issue it are much higher, since in this case the bank is confident in the stability of wages and that the applicant will not be fired.

The requirements for the co-borrower are exactly the same as for the main applicant, since he participates in the payment of the loan taken on absolutely equal terms. Most often, the co-borrower is necessarily the spouse of the applicant.

The requirements for persons guaranteeing the payment of a loan are approximately the same.

Liability of the guarantor and co-borrower under the mortgage

If a mortgage loan is issued by several borrowers, then they are jointly and severally liable, that is, the bank has the right to demand the fulfillment of obligations both from all co-borrowers at the same time, and from any of them individually. If the creditor has put forward claims only to one co-borrower, then he has the right of recourse claim to the other parties.

In the case of a guarantor, two types of liability are possible: joint and several (most often banks prefer it) and subsidiary. In the second case, the bank may apply for debt collection when the insolvency of the borrower is proven.

If there are several guarantors, they are jointly and severally liable, unless otherwise provided in the contract.

The co-borrowers are jointly and severally liable. Guarantors may bear both joint and several liability.

How to stop being a guarantor and co-borrower on a mortgage?

Since the co-borrowers are obligated to repay the loan all together, then all obligations cease at the time the loan is repaid. It is extremely problematic to obtain consent to a withdrawal from among co-borrowers and is possible only in exceptional cases. In order for the bank to give permission for the withdrawal of a co-borrower, it is advisable to provide another candidate who will transfer all the rights and obligations of the withdrawn party. In this case, the solvency of the candidate will be analyzed on a general basis.

The grounds for termination of the guarantee are the same, but there is one more ground. If the mortgage is transferred to another borrower, then the guarantor is released from fulfilling obligations if he does not confirm his consent to remain so.

According to Article 367 of the Civil Code of the Russian Federation, the death of the debtor is not a basis for terminating the guarantee.

Speaking about how to terminate a mortgage guarantee agreement, the interested party should contact the banking organization that issued the loan and write a written statement indicating the reasons for terminating the agreement. If the bank deems them valid, then the surety agreement may be terminated.

Becoming a mortgage guarantor is much easier than giving up your obligations.

Can the guarantor take over the mortgage?

Since a mortgage is issued for many years in advance, potential guarantors are interested in the question of whether they themselves will subsequently be able to issue a mortgage loan for themselves.

There are no legal restrictions, but banks have a slightly different opinion. When considering an application, banks are asked to indicate whether the applicant is a guarantor. If yes, then it is assessed whether the applicant's income is enough to pay his mortgage and fulfill the obligation under the contract in which he acts as a guarantor. Accordingly, the chances of obtaining a mortgage and the size of the loan are significantly reduced, since not every person has an income that allows, if necessary, to pay two mortgage loans at once.

If you plan to apply for a mortgage in the future, then it is better to immediately refuse guarantees.

Results

So, by comparing how a co-borrower differs from a mortgage guarantor, a number of fundamental differences can be identified:

• the incomes of co-borrowers are added together, which increases the amount of mortgage that the bank is willing to provide. The guarantee does not affect the final amount of the loan;
• All co-borrowers sign a loan agreement and have equal rights and obligations. They may be co-owners of the acquired property. The guarantor, after paying off the loan, has no rights to the acquired object. The guarantor may claim the incurred costs from the debtor, but only in court;
• co-borrowers are required to repay the loan amounts in accordance with the agreement. In the case of a guarantee, as a rule, the borrower pays the loan, and if he is insolvent, then the guarantor must fulfill the obligations.

Often, when contacting a bank for mortgage lending, a potential borrower hears such a thing as a “guarantor”.

Mortgage guarantee: bank requirements

The guarantor has no rights to the property acquired by the borrower and does not repay the loan with him, but he gives a written guarantee to the bank that he undertakes to fulfill the borrower's loan obligations if he cannot do it on his own. The guarantor's income must be higher than the monthly mortgage payment, but they do not affect the maximum loan amount.

Today, fewer and fewer banks require the presence of a guarantor when applying for a mortgage loan, such a requirement is usually an additional guarantee for the bank when working with unreliable clients. Pre-retirement or vice versa, too young age of the borrower, low income, frequent job changes, other loan obligations - all this may prompt the bank to require a guarantor. Those banks that issue mortgages without guarantors include all their risks in the interest rate, so the involvement of a guarantor may mean more favorable lending conditions for the borrower.

The difference between a mortgage loan with a guarantor and a mortgage loan without a guarantor is that the bank will be able to foreclose on the pledge only when both the borrower and the guarantor are insolvent (in case of a mortgage without a guarantee, the pledge can be recovered earlier if the borrower is unable to repay the loan). Thus, with a mortgage with a guarantor, the probability of the bank repaying the loan with money, and not with mortgaged real estate, is much higher.

Mortgage guarantee: requirements and terms

Any individual or legal entity can act as a mortgage guarantor. The guarantor must provide the bank with a package of documents that would confirm his solvency, he should be able to pay the same amount monthly as the borrower (here it should be noted that if the guarantor decides to issue any loan for himself in the future, then his creditor bank will take into account the possibility of the client having credit obligations, which can significantly affect the maximum loan amount that will be available to the guarantor).

The terms of the guarantee may be different - sometimes the involvement of a guarantor is necessary for a short time, for example, until the property is transferred to the bank as collateral for a loan. Such a guarantee does not end on its own after a certain period of time; here it is necessary to document the guarantor from the loan agreement. If the presence of a guarantor is necessary throughout the entire term of the contract, then one guarantor can be replaced by another. This can only be done with the consent of the bank. It should be noted that the guarantor cannot unilaterally withdraw the guarantee.

Liability of a guarantor in a mortgage

The obligations of the guarantor include the full repayment of the mortgage along with the accrued interest for the borrower, if he does not do this on his own. The guarantee agreement between the guarantor and the bank prescribes the conditions for repaying the loan instead of the borrower, namely the loan amount to be repaid, the loan repayment period, the payment schedule, the interest rate on the loan, the interest rate on overdue debt, the commission for granting a loan (optional), a fine for violation of the terms of the agreement (debt repayment terms and accrued interest).

Separately, it is worth noting the fact that as soon as the borrower is blacklisted due to non-payment of the mortgage, the credit history of the guarantor also begins to be considered bad. If the guarantor is unable to repay the loan instead of the borrower, then he bears property liability to the bank.

The liability of the guarantor may be joint and several (full) and subsidiary (additional). The type of liability must be specified in the surety agreement. Joint and several liability implies that the bank turns to the guarantor immediately after the borrower's payment delay, in parallel turning to the borrower. With subsidiary liability, the bank turns to the guarantor only when the application has already been sent to the borrower, and he has not taken any action to repay the loan. With this type of liability, the bank cannot demand payment of the loan from the guarantor if he failed to contact the borrower. In addition, the lender must prove the insolvency of the borrower.

If, when applying for a loan, the borrower attracted several guarantors, then the responsibility is not divided between them, the lender applies to each of the guarantors with a full demand, and it does not matter to the bank who exactly repays the borrower's debt. Each guarantor, at the request of the bank, is obliged to provide information about his financial condition, inform the creditor about the change of residence, documents, and so on.

Rights of a mortgage guarantor

If the borrower's obligations to the bank are fulfilled by the guarantor, then the rights of the creditor pass to him and he becomes the mortgagee of the borrower's real estate. The guarantor must obtain documents certifying his right to claim against the borrower from the bank. In the future, these documents are submitted to the court to recover the debt from the borrower. The main documents include a loan agreement, a surety agreement, a certificate from the bank on debt repayment, an agreement on the assignment of the right to claim, payment documents.

To receive the funds spent on repaying the mortgage, the guarantor applies to the borrower in writing indicating the full amount of the debt (mortgage + interest + court costs + fines + penalties). The written appeal must contain information on the terms and conditions for repayment of the debt, as well as a note that if the debt is not repaid, the guarantor will have to go to court. If no response is received from the borrower, the guarantor may sue. If the court decision is in favor of the guarantor (which is most likely), the guarantor turns to bailiffs for help in recovering his property from the borrower. And only after the sale of this property, the guarantor will return his money.

A guarantee is not a simple formality observed when applying for a mortgage, but a guarantee for a bank that minimizes its financial risk.

Credit organizations always provide for force majeure that can happen in the life of borrowers, therefore, they require successful and reliable guarantors who are ready to pile on their shoulders the loan payment of a friend or relative.

List of rights and obligations

The rights and obligations of guarantors are exactly the same as those of the borrower. That is, by signing the contract, such a person assumes financial responsibility for the actions of the client of the credit institution.

In some cases, the guarantor has to pay the mortgage on their own.

The most common force majeure events are:

• The disappearance of the borrower and, accordingly, the termination of monthly payments to the bank.
• Loss of source of income or ability to work by the borrower.
• Death of a bank customer.

A guarantee is a responsible step, before you take it, you must carefully weigh the pros and cons.

First of all, you should answer the question - are you ready to pay money for another person who has spent a loan for his own needs?

The guarantor has not only duties, but also rights. In some cases, you can keep your money or at least partially return it.

The guarantor has the right:

• Require the bank to provide all mortgage documents. The credit institution is obliged to do this if it was the guarantor who paid the entire amount.
• Challenge the bank's decision. It does not matter whether the borrower agreed with him or not.
• Demand compensation from the borrower for all costs, including legal costs, if a part was paid.

A guarantee has many pitfalls, so you should think carefully before agreeing to take on such a serious responsibility. At the same time, knowledge of the rights, although it does not exempt from credit obligations, at least allows you to pay huge amounts for good reason.

What is the responsibility?

The liability of the guarantor may be subsidiary or joint and several.

In the first case, a person has at least minimal, but protection. He will be obliged to pay the loan only after the bank proves the borrower's disability in court.

If the client has disappeared, then it will be impossible to do this. Joint and several liability implies the same responsibility of the borrower and the guarantor.

By signing a guarantee agreement, a person risks a lot:

• All expenses are borne by the guarantor. He not only pays the mortgage, but also pays for late payments, covers interest on the loan, and compensates the bank for the costs of litigation.
• The guarantor risks his property, which may become the property of a credit institution due to late payment of the debt and lack of property from the borrower. The only exception is real estate, which is the only housing for a person.
• Late payments affect the credit history not only of the borrower, but also of all its guarantors.
• The presence of a guarantee significantly reduces the amount of your own loan. If the guarantor wishes to take out a loan in the future, then the bank will give him much less than he should, because an allowance will be made for the already existing mortgage, for which the client has vouched.

It is theoretically possible to relieve oneself of responsibility, but in practice it is problematic to do so.

To do this, you need to obtain consent not only from the borrower, but also from the credit institution. The guarantee does not terminate either after the death of the debtor, or after the divorce of the spouses (if one of them is the borrower, and the second is the guarantor).

Requirements for a guarantor for a mortgage in Sberbank

When applying for a mortgage at Sberbank, the guarantor's questionnaire is considered one of the important documents, because it is from it that the bank determines whether a person is suitable for this business or not.

Very often, a credit institution refuses to issue a loan without indicating the reasons, and they may lie in the wrong choice of guarantors.

Therefore, it is important to know about the requirements for them by the bank:

• Russian citizenship is a priority, but in some cases a foreigner can also act as a guarantor. Sberbank, when applying for a mortgage for one of the spouses, requires the other half to become a co-borrower or guarantor. In this case, the husband or wife may have foreign citizenship.
• It is obligatory to have a permanent residence stamp in the passport. The guarantor must be registered in the locality in which the application for a mortgage is submitted.
• The guarantor must be at least 21 years old at the time of the loan, and not more than 75 years at the time of repayment of the debt.
• It is necessary to have at least 1 year of total experience for the last 5 years and work at the current place of work for at least six months.

Who can become one?

The ideal guarantor for any bank is a young man over 25 who has served in the army, has a positive credit history, a well-paid job, real estate and movable property. The same applies to girls.

The bank is more favorable to women after the decree.

The guarantors are usually close relatives of the borrower, in rare cases, friends.

What documents need to be submitted?

The guarantor must submit the following documents to the bank:

• Application form.
• Passport with registration stamp.
• Military ID (for men).
• Certificates confirming employment and financial condition.
• Pledge documents.

Typically, the list of documents submitted by the borrower and the guarantor is the same, because they have equal responsibilities.

Depending on the size of the mortgage, a different number of guarantors is required.

When applying for a loan up to 45,000 rubles. no guarantor or collateral is needed, but Sberbank does not issue such loans.

A mortgage in a bank is issued only from 45,000 rubles.

Is a guarantee agreement required?

When registering a mortgage between a credit institution and a guarantor, a guarantee agreement is mandatory.

It exists in two copies, one remains in the bank, and the second is given to the guarantor. It is in this document that all the obligations of the debtor are prescribed in detail.

By signing the contract, the guarantor knowingly agrees with all its clauses.

They are:

• The guarantor bears the same liability as the debtor for failure to fulfill obligations by the borrower.
• The bank has the right to demand repayment of the loan from both the borrower and one of the guarantors for choice. In this case, the credit institution takes into account the solvency of customers.
• The guarantor cannot make any claims against the bank.
• Even after the loan is reissued to another person, the guarantor is still responsible for fulfilling all the debtor's obligations under the agreement.

Only agreements in writing, signed by both parties, have legal force.

That is why Sberbank without fail requires the conclusion of an agreement not only with the debtor, but also with his guarantor or guarantors. Thus, the bank insures itself in case of force majeure situations.

A guarantee is not only a sign of trust in a person who is going to take a mortgage loan.

This is a very serious step, which implies a great responsibility.

You never want to consider the negative consequences, but still it is worth considering that sometimes unforeseen circumstances happen.

It is only necessary to agree to a guarantee if the debtor does not have hidden “skeletons in the closet”. That is why the guarantors most often take close relatives who are ready to lend a helping hand to the borrower.

Video: Guarantors and co-borrowers

A guarantor is a citizen who guarantees the fulfillment of the borrower's mortgage obligations to the bank in a situation where the borrower is unable to repay his debt on his own.

Today, banks operate in a competitive environment, so there is less and less demand for one or more mortgage guarantors. This requirement is practically not applied in Moscow, but is used only in certain regions.

Requirements

Not only a citizen, but also a company can be a guarantor. For example, the employer of the borrower can become a guarantor. If, due to various circumstances, the borrower does not have the financial ability to repay its obligations to the bank, then the guarantor is obliged to pay the entire amount of the debt to the bank and the amount of accrued interest. Also, the guarantor is obliged to compensate the bank for various costs incurred to collect the debt (legal costs and others).

After performing these actions, the rights of a banking institution as a creditor are officially transferred to the guarantor, as a result of which he has the right to demand compensation from the borrower for his expenses. As a rule, such cases are resolved in the course of litigation.

The guarantee does not act as a standard formality, but as a full-fledged guarantee of a banking institution, with the help of which banking risks are minimized.

Banks always provide for force majeure circumstances for borrowers, therefore they require reliable guarantors who can fully cover the amount of debt in the event of the borrower's financial insolvency.

Rights and obligations of a mortgage guarantor

The rights and responsibilities of guarantors for a mortgage loan are similar to those of a borrower. When signing the agreement, such a citizen assumes financial responsibility for the borrower. In some situations, it happens that the guarantor independently pays the mortgage loan.

The most common unforeseen situations:

• the disappearance of the borrower in an unknown direction, stop the payment of a mortgage loan;
• dismissal from the place of employment, loss of a permanent source of income;
• death of the borrower.

In some cases, the guarantor has the right not to pay the mortgage loan and keep their funds. Consider his rights:

• requirement from the bank of all mortgage documentation, the institution is obliged to provide documentation if the guarantor has paid the entire loan amount directly;
• challenging the decision of the bank, it does not matter whether the borrower agrees with it or not;
• requirement from the borrower to compensate for all costs incurred to repay the debt, including legal ones.

The institution of guarantee is characterized by many nuances, so a person, before taking on the burden of responsibility, must weigh the pros and cons. Knowing your rights, you can save yourself from paying significant amounts to a banking institution.

Liability of the guarantor

The law provides for subsidiary or joint and several liability:

1. In the first case, the citizen has minimal protection of his rights and finances. He undertakes to pay the mortgage loan only if the debtor's incapacity for work is proved during the trial. If the borrower simply disappeared, the bank is not entitled to demand payment of the loan by the guarantor.
2. With joint and several, equal liability of the debtor and his official guarantor is provided.

When signing a guarantee agreement, a citizen bears certain risks:

• he takes responsibility for all costs - that is, he pays not only the debt, but also all the amounts of fines, penalties, interest;
• risks his property and property, which may become the property of the bank if the borrower does not repay the debt in a timely manner and if he does not own property that can cover the debt;
• in case of delay in payments, the credit history of not only the borrower, but also his guarantors suffers;
• in the presence of a guarantee, the amount available for lending for the guarantor is significantly reduced, that is, if he also wishes to issue a loan, the amount will be significantly less if there is a valid mortgage.

In practice, it is not possible to terminate the guarantee agreement, because the permission of the borrower and the banking institution is required. The guarantee agreement does not terminate after the death of the debtor or after the registration of a divorce.

On the video about the responsibility of the guarantor

So, the guarantor in mortgage lending is a responsible task, since he has the same responsibility to the bank as the borrower. And in case of non-payment of the debt by the borrower, the bank makes demands to the guarantor. Therefore, before becoming a mortgage guarantor, it is necessary to weigh the solvency and reliability of the borrower.