Money Moral Dilemma: Should we be guarantor for our relative?

ashtray_heart

As a different perspective my Aunt was a guarantor for me when I did my PhD. My parents couldn't do it for various reasons and we had a good enough relationship that she knew I would never default. I was however paid to do my PhD but as it was a grant the rental company wouldn't count it as income. I am to this day very grateful for her love and support. I think it depends on how close you are to them, if you know whether they are the kind of person to default or not.

-taff

No no no no no

PasturesNew

Worst case scenario: They rent a house with others, they do a bunk from their course after month 2 and they leave the house, the other house tenants stop paying their rent are a bit wild and sub-let his room, then they have an end of year party where the police are called and the house has been trashed.

You COULD end up with the whole bill for the whole house for the year and all the repairs .... simply because you're the one with equity in your house and nobody else actually had a guarantor that's chasable.

Epimetheus

I went guarantor for a couple of relations, who were in private rented accommodation during their university time. However, I amended the terms of the guarantee by inserting a phrase, which indicated that my total financial liability for claims was not to exceed a particular figure in total. I also indicated this verbally to the letting agent. The amendments were accepted on each occasion. It came down to - pitching the figure at a mutually acceptable level and how easy it would be for the landlord to find an alternative tenant of an acceptable nature sufficiently quickly.

I also persuaded the letting agent to amend some of the actual terms of the letting agreement itself. After all, it must be remembered that, like everything else, it only represents what the landlord wants - not what he is obliged to have - unless there is absolutely no alternative.

misteralien

First things first. Read the proposed guarantor agreement. You will most likely find that, if your relative defaults, you could be faced with additional costs over and above the rent. Also, many of these agreements will enforce the guarantee against your estate if you die. Imagine what would happen in the worst case scenario and how it would affect your finances. Get the picture? I would never agree to such terms, for close family or anyone else. You might consider loaning your relative sufficient money to avoid the need for a guarantor, such as payment of rent up front. If you can't afford to do this, you can't afford to be a guarantor.

boliston

Guarantor agreements are mainly parent > child for student accommodation or child > parent for retirement accommodation. I would steer clear of any other arrangement unless I was seriously loaded.

happyinflorida

Being a guarantor means nothing - we previously owned a property we rented out to a "working" couple who the agency said needed a guarantor as they'd been living and working abroad previously ( I think this was made up by these two to avoid their previous history being discovered).

The girl's father was guarantor and when she ran off and the man didn't pay the rent - he told me she'd cleared the bank a/c & their savings a/c, I contacted the father for payment. He didn't reply, I didn't have a phone number so I sent a letter by recorded delivery. He then replied stating he wasn't prepared to pay anything!

I took legal advice & was told I'd have to take him to court & without knowing his finances it could prove to be a complete waste of time if the court were convinced he couldn't pay - so I was left with money owing & damage to the property which I couldn't get anything back for as their measly one months rent deposit was used for paying the rent when the man then gave notice - a complete nightmare.

I would not be a guarantor for anyone apart from my own children who I know and trust.

Lockie21

If this person is a mature student don't they have any savings of their own? Surely someone planning to do a degree as a mature student would plan ahead. I think you need to look at the whole financial situation your relative will be in, grants, loans, bursaries etc before committing or like the others have said you will have a lot of stressful nights.

bm546

As a 29yo, I started a degree in October 2015. I work full time and pay my own rent. I would suggest if they can't afford to give up working and pay their own way, then do a distance degree the same as I am.
It may not be easy and may take up a lot of your relatives spare time but it just depends how much they actually want to do it.

My friends dad went as a guarantor on a loan for her brother- the dad has now had to pay a £19,000 debt and still has the loan company calling!

TBagpuss

It's potentially very risky and I would definitely want more information.
depending on he person's relationshipwith me, what I knew of their financial position and behaviour,and the terms of the guaratee I might consider it.
As Epimetheus says, it might be possible to limit the guarantee.

Not all mature students are 'perpetual students'. In many cases they may well be far more committed than those going to university straight from school. In many cases they will have a much clearer idea of what they want, and as they are likely to have given up the security of an exisiting job they may well have done more research and have a more realistic idea of the financial implications of studying and the likely outcomes.

While I would be extremely wary of acting as a guarator or anyone, I would pobably be more likely to consider it for someone who was a mature student than for a n 18 year old going direct to university.

Bu of you do consider doing it, do your research, and limit your guarantee.

If you don't, then citing the likely commitments to your own children rather than concerns about risk are probably the way to go to avoid damaging the relationship with your relative.