lowering risks when going guarantor. advice please.

what can family do if we think an aged member could make bad decisions and blow her own security as well as family assets that should be handed down for generations.

I have a feeling they are going to go as guarantor for a young relative to help them get into the property market and it worries me. what could go wrong and how can we minimise risks or do as much as possible to show it is low risk or is not.
eg good choice of property
his income and paying rent ability seems to be ok

whats predicted for interest rates ( when i bought they were 17% 20 years ago and a few thousand a month instead of several hundred in repayments)

I would not have been able to buy a house without this relative going as gurantor for me decades ago, the property i chose was foolproof or in a foolproof area he will not be able to enter such an area.

if theres going to be a world wide financial crash predicted does that mean it will be easier cheaper to buy good properties and what else does it mean



what else can you tell us about this.
 
The best way to protect a guarantor is to not take the guarantee the in the first place......................

There are a few things one can do

Make sure the borrower secures their income with the usual insurances.

Does the borrower have multiple income streams

DONT borrow beyond the borrwers capacity to repay...........Obvious I know..........


ta
rolf
 
With our last purchase, we were close but not quite there on the security (could have changed banks to avoid this, but wanted to move quickly).

The purchase was a house shared (my hubby and my parents) and we didn't want to use the title deed for the house being purchased due to the associated rigmarole involved due to mixed ownership. We still needed a little security so my parents went guarantor for us, had to sign a document, much less fiddling about than actually using the title deed.

The guarantee was limited to $100K from memory, so had we gone belly-up, my parents would have only had to cough up $100K. Once the value of the property rose by enough to release them from this guarantee, this was what we planned to do, but we have done nothing about it. The increased values of our holdings would mean that unless something drastic happened to the values of property, this guarantee would not be needed (fingers crossed).

Perhaps this is one option for your relative.
 
The guarantee was limited to $100K from memory, so had we gone belly-up, my parents would have only had to cough up $100K.

Not just belly up, but whatever asset the guarantee is used to by must have either gone backwards, the lend would be a high sole lvr, or the costs of recovery would be high.

ta
rolf
 
thanks so much rolf and wylie.

what does this mean that Rolf said

'whatever asset the guarantee is used to by must have either gone backwards, the lend would be a high sole lvr, or the costs of recovery would be high.'



so can you actually guarantee only a certain amount and without putting a title in?

rolf it may be obvious dont borrow more than you can repay but i was also told to calculate on a higher interest rate than is currently incase .

so he should get income insurance how does that work exactly. income protection insurance i think it used to be and may still be called. what exactly should he get.
also incase of incapacitated or what else do we look at.

thanks.
 
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