Can I Switch Loan Guarantor Later If My Situation Changes?

You may consider a guarantor if you struggle to qualify for a loan due to credit or income issues. It could be for students, self-employed, and part-time earners with low income. It requires you to spot the person whom you can rely on with your finances.  

Additionally, he must have a better income and credit score than yours.  Once the guarantor signs the agreement to be a guarantor on your payments, you cannot switch them. It is unless you have a strong reason or the guarantor gets bankrupt or loses their job.   

When can a person stop being a guarantor?  

Usually, one can switch guarantors before the final loan agreement. Many loan providers offer a cooling period of 14 days to back off as a guarantor. It is in case you change your mind and return the funds without any charges.  

This is the fund that a guarantor gets after loan approval into their bank account. Within this cooling period, the guarantor can also decide whether he wants to give the money to the prime borrower or keep it to himself. 

Thus, this 14-day cooling period is the only time when the guarantor can opt out of the loan agreement. After this, it is challenging to move out until the loan term ends.  

Can a non-homeowner be a guarantor on a loan? 

Yes, individuals renting an apartment or living with their guardians can be a guarantor for someone. The person must have a regular income to support the payments.  It is mandatory if the prime borrower lacks one.  

Moreover, the guarantor must have a disciplined financial module that is sufficient to generate reliability for the loan provider. You may seek non homeowner guarantor loans from direct lenders online. One can consider it if:  

• You need urgent money but are unemployed 

• You need money with a low income that does not meet the criteria 

• You need only a small amount, like bridging the rent payments 

• The guarantor is someone whom you can rely on with your finances 

Why does the person struggle to quit the loan agreement as a guarantor?  

A guarantor on the loan is the prime decision-maker. He agrees to help the borrower qualify for a loan and assist in repayments if needed. It is a very thoughtful decision that a guarantor makes.  Moreover, a loan provider invests a great deal in analysing the guarantor’s finances before approval. He checks the credit score, income, homeowner status, location, and age. 

 If the person meets every criterion, the borrower gets the loan.  In this case, if the guarantor quits or the prime borrower brings in a new one, the loan terms will change. It will affect the basis on which the actual borrower got the loan. Precisely, it could prove riskier for the loan provider. Everything will start from scratch, and it may affect the loan timeline for the borrower, too.  

Can you change the guarantor midway through a loan agreement?  

You cannot change a guarantor, as the details of the guarantor are integral to the application and, thereby, the loan. As mentioned above, the loan provider must go through the detailed analysis again.  

It will change the terms of the agreement and the amount you may qualify for.  Moreover, it may turn out to be a loss for you, too. If the new guarantor’s credit score or income is slightly less than the previous one, you may get a lower amount.  

Moreover, the new guarantor doesn’t need to help you get out of financial trouble. Therefore, identify, improvise, and then apply for a loan with a guarantor. It is a sensitive concern which may affect your relationship, finances and credit score. It is when the deal breaks in between the agreement. Ensuring clarity, coordination and cooperation as a prime borrower and a guarantor is important.  

Is it possible to change the guarantor in an extreme case?  

While it is not ideal or possible to switch the guarantor, you can try some aspects in extreme cases. The following circumstances may help:  

1. Death of the guarantor 

It is an unfortunate event which may allow you to change the guarantor. If your loan guarantor dies, their spouse will be the next guarantor on the loan. She may help the prime borrower with the payments if he cannot.  

2. Guarantor gets redundant 

The prime basis of a guarantor-based loan is the income, which should be higher than the borrower’s. If the prime borrower has a low income and the guarantor loses their job too, the loan agreements become irrelevant. In this case, one may provide another guarantor who qualifies for the basic eligibility criteria for a guarantor.  

3. Borrower cancels the loan in time 

If the prime loan borrower decides to move out of the loan agreement before the cooling period, he can seek a new guarantor. It may help him qualify for a new loan.  

4. New tenancy agreement 

Individuals seeking a guarantor to get a rental agreement may benefit here. They can change the guarantor when the agreement renews. Here, the renter can either continue with the same landlord or seek different rental options. If he decides to continue with the existing agreement, he can begin with a new guarantor. However, the latter must meet the conditions set by the landlord to be a guarantor.  

Alternatively, if you struggle and need urgent cash for home repair, check options. You may get guarantor loans for non homeowners online. Here, you may sign an agreement with someone who is not a homeowner. He could be your roommate, college friend, etc., who may help you get a small loan for urgent repairs. However, he must have a reliable income to help you if you cannot pay the dues.       

5. Paying the existing loan 

Another circumstance where you can change your guarantor is overpaying the existing loan. By completing the dues before the actual repayment date, you may get out of the loan agreement. It grants you the freedom to choose another guarantor for the new loan. However, spotting such a scenario is rare in the UK.  

Bottom line 

Changing a guarantor is usually impossible after you get the loan. This is because switching one changes the existing terms, affordability, and amount parameters.  It means getting an entirely new agreement with fresh terms.  

It is risky for the loan providers, and hence, you cannot do that. However, you can change the guarantor before getting final approval. It is possible within the loan cooling-off period. Lastly, if the guarantor dies, the responsibility automatically goes to the spouse, who becomes the new guarantor as per the law.