When applying for a home loan, the banker may consider that your financial situation is not strong enough and ask for joint surety. In the event of a payment incident, the lender may then require that the surety intervene by covering the installments. The guarantor is not necessarily a co-borrower, any more than a co-purchaser. The point with ferrets.
The differences between the status of co-borrower and joint surety
The very strict framework of the joint surety for a mortgage loan
In exchange for granting the loan, the banker may impose a joint surety . The commitment of a joint surety has serious consequences for it, since in the event of default by the borrower, the surety will find itself in the front line . It will have to pay the sums due to the creditor, if the borrower cannot pay them.
Even if it is not a co-borrower, the guarantor must be fully informed of the conditions of the loan . She must receive a copy of the loan offer, worded under the same conditions as for the borrower. To be accepted by the lender, the guarantor must, of course, have sufficient means or assets, able to cover the loaned capital, in the event of default.
The deposit must be formalized in writing before a notary or under private signature . Each year, the lender must provide a summary statement containing the outstanding capital, interest, as well as any fees and commissions.
Difference between simple and joint surety
As far as possible, it is preferable that the guarantee of the loan be simple and not joint and several. The differences are noticeable:
The simple deposit is lighter to bear and requires the lender to explore the borrower’s repayment capacity as a priority.
The joint surety, on the contrary, is activated by simple decision of the banker .
Another advantage of the simple surety is to be able to limit the height of its commitment. During the assembly of a file where the acceptance is acquired and that the bond is only one additional guarantee, the borrower can negotiate the fact that the bond is simple.
When setting up the loan file, the joint surety has every interest in paying particular attention to the guarantees taken out as part of the borrower insurance . This insurance protects the lender, but also the guarantor. The more the guarantees are extended, the less the surety runs the risk of being called in the event of a problem.