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Guarantor loan debts

Being a guarantor for loans, rent and mortgages

What is a guarantor?

A guarantor is a third party who ‘guarantees’ a loan, mortgage or rental agreement. This means they agree to repay the total amount owed if the borrower or renter can’t pay what they owe. By guaranteeing the agreement, you become responsible for any arrears that occur.

Before you agree to be a guarantor, it’s very important to check both you and the renter or borrower really can afford to keep up with all the repayments. You need to be fully aware of what could happen to you if the other party fails to pay what they owe. Find out more about guarantor loans.

In the first instance, try to negotiate a payment arrangement, based on what you can afford, to avoid the lender taking any further action to recover the debt.

Guarantor loan debts can be included in most debt solutions, including debt management plans and bankruptcy.

Considerations before being a guarantor


It’s important to understand the risks and how you’d be able to afford to cover repayments before guaranteeing a loan, mortgage or rental agreement.

  1. Ask the borrower/renter to go through their current financial situation in detail to check they can afford the repayments.
  2. Put some money aside as a ‘just in case’ fund that you can use to repay some, or all, of the loan if you have to.
  3. Make sure you read and understood all the documents before you sign the agreement.

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Can being a guarantor affect your credit rating?

The lender, landlord or lettings agency will do a credit check when approving you as a guarantor. This search of your credit history will be added to your report. If the account or agreement defaults, this will also be recorded there.

Find out more about how debt affects a credit file.

Who can be a mortgage or loan guarantor?

Many people can be guarantors. Lenders have their own rules and guidelines, but usually guarantors will:

  • be over 21 years old
  • have a good credit history
  • have a separate bank account to the borrower – you may be able to guarantee a loan for a spouse or partner, but only if you have separate bank accounts

The lender needs to know the guarantor would be able deal with any loan or mortgage arrears. Because of this, guarantors are sometimes asked to provide proof they’re in work or have sufficient assets (such as a property) to cover the full amount owed in the loan or mortgage. Being a homeowner often helps with the application.

How much would I have to pay back on a mortgages or loan?

The full amount borrowed, including any interest and charges, is included in the amount you’re guaranteeing.

Guarantor loans are often taken out by people who find it difficult to get credit by other means, due to the lender considering them a risk. Because of this risk, the interest rates are often higher than other personal loans.

How much would I have to pay back to a rental agreement?

You’re guaranteeing the full amount for the length of the agreement the tenant is signing for. Tenants often sign up for six to 12 months on a new agreement. After this time there will be rolling notice period, which can vary.

As a guarantor, you have full responsibility to pay what’s owed. If even just one payment is missed, the creditor can contact you to demand you pay what’s owed or take the money from your bank account - if you’ve signed a Continuous Payment Authority as part of the agreement.

Who can be a guarantor for renting?

There are no strict rules, it depends on the landlord or lettings agency. They will want evidence that the guarantor would be able to afford to pay any rent that’s not paid by the renter, for the full term of the rental agreement on top of their usual outgoings.

For many people this is a friend or family member who:

  • Is between 18 and 75 years old (often 21 or older)
  • Is a UK resident
  • Doesn’t have a bad credit history – credit checks will be run by the landlord or letting agent.

It’s very important the guarantor reads and understands the rental agreement and is aware of the full amount (based on the amount of time this covered) that they’d be responsible for repaying.

signpost iconAre you looking for help with dealing with rent arrears?

I need a guarantor for renting but can’t find one. What can I do?

There are some schemes run by a number of local authorities that can help people out with deposits and guarantees or even advance rent payments. Check with your local council.

Students should check the support available from their college or university.

For specialist rent advice, go to Shelter


Housing advice can be complex, so we recommend contacting an advice agency that specialises in this subject.

  • In England or Scotland, contact Shelter or Shelter Scotland. They have a telephone helpline (0808 800 4444) and a website packed with useful information.
  • In Wales, contact Shelter Cymru on 0345 075 5005.
  • In Northern Ireland, Housing Rights or call them on 028 9024 5640

 

Contact your local authority if you're at risk of homelessness because of eviction. Their housing department will be able to advise you about applying for social housing or emergency accommodation.

If you’re struggling to get a rent agreement due to a poor credit history, you might be in need with help with your debts. Get in touch with us or use our online debt advice tool for free, practical money advice and solutions.

Need help with a guarantor loan?

If you’re struggling to repay a guarantor loan, or you’re looking for help dealing with your debts, we can help. Use our free online debt advice tool to look at all of your available options and give you expert advice for your situation.