As we mentioned above, becoming a guarantor isn’t something that anyone should do lightly. A guarantor is agreeing to become responsible for the repayment of the loan if you aren’t able to pay the instalments.
Once named, a guarantor can’t withdraw from the loan halfway through; they must remain as the guarantor for the whole duration of the loan. This is why it’s essential to understand from the start that this is not simply red tape, the guarantor is an integral part of the loan.
If you fail to meet the repayments and the guarantor does not pay either, their credit rating will be adversely affected.
The requirements will vary from one lender to another but there are some general criteria that you will need to meet.
It goes without saying that you need a good track record when it comes to managing credit before a bank will consider granting you a home loan. You need to be able to show that you pay your debts in full and on time.
You need to be 18 years or older, permanently employed for six consecutive months or self-employed for the past two years.
In terms of the documentary requirements for the application itself, here’s our handy top 6 to guide you:
- Proof of income: you must supply your latest salary slip. Some institutions may ask for the last three salary advices, especially if you earn commission or overtime. If you are married in community of property (COP), your partner will have to supply the same.
- Make sure you have the last three months’ bank statements for your personal account as well as for your partner’s, if applicable.
- You need to provide a copy of your South African ID document (and your partner’s if applicable).
- You will need to supply the bank with a statement of your monthly income and expenses, which includes your monthly debt repayments and living expenses.
- The bank will ask for a personal assets and liabilities statement.
- Of course you’ll need to hand over a copy of the purchase agreement as well.
A Mortgage loan can play an important part in rebuilding a damaged credit rating when other types of credit are inaccessible. To find out more about Mortgage loans or to apply, call Dap Finance (Pty) Ltd on +27 (0) 877 291 753 today.