A guarantor is a person who promises the lender that they will repay a debt if the principal debtor defaults.

When a client is unable to obtain financing by themselves a guarantor will be requested. Things like insufficient employment history, poor history of debt repayment or un-confirmable income are reasons a guarantor could be required.

Asking someone to be a guarantor is a big step. This means the guarantor becomes part of the mortgage application and doesn't mean you are automatically approved. Like the buyer the guarantor will have to disclose his or her assets & liabilities, income, and have a credit check done.

When approved, the guarantor will have to sign the mortgage documents, showing their obligation to the lender. The guarantor should consult a lawyer who is not part of the real estate transaction, and who will explain to the guarantor exactly what his or her responsibilities will be should the primary debtor default on the mortgage.

A guarantee is a secondary obligation arising only on default by the primary debtor. A creditor (the lender) has no rights against the guarantor until the primary debtor defaults. However, as soon as the primary debtor defaults on even one payment, the lender may request payment from the guarantor. The lender does not have to notify the guarantor of the default before starting an action to enforce the guarantee.

So remember you are asking someone to take on a huge responsibility do not take it lightly.