Can I become a guarantor for a relative of mine, who wants a home loan of 22 lakhs. Is it advisable or risky? Will this affect my CIBIL score or loan eligibility in future? Ajay, Faridabad.
Unless you know for sure that the person is trustworthy and capable of paying off the debts on his own, do not become a home loan guarantor. It is highly advisable to be a guarantor only if the borrower is your son, father, mother, spouse or siblings. You need to understand that if the borrower doesn’t pay off the debts, you will be entitled to pay off the loan. You might even be put in a situation where you need to sell your property/assets to repay the bank. Being a guarantor does affect your credit rating and it will most likely dent your chances of getting any further loan. Being a guarantor is not a bad idea if it’s your family members, but if it is your colleagues or friends or relatives, it is quite risky.
Becoming a guarantor has similar effects to becoming a borrower. You will be responsible for the repayment of the loan in case the original borrower defaults. Also, if the borrower doesn’t repay on time, your Credit Score will also get affected. It can also affect your eligibility for loans. So, if you are planning to become a guarantor for a loan, think it through very carefully. If you think it is too risky, don’t do it.