The risk analysis criteria sometimes lead the bank to request additional guarantees from the borrower such as the assistance of a joint surety. It happens however that the mortgage is refused despite the contribution of the guarantor. Explanations with our experts.
The conditions related to the personal guarantee
A loan can be refused even with a deposit. There are two reasons:
- The financial position of the guarantor is not strong enough.
- The situation of the borrowers is precarious and the bank does not want to put most of the risk on the bond .
The guarantor does not have the financial strength required
In the first case, it goes without saying that the assistance of a guarantor is only valid if his financial situation is likely to reassure the bank. The latter will analyze each element of the situation of the guarantor as it does for the borrower:
- The last three bank statements
- The last three payslips (for retirees, the latest tax notice)
- Loan contracts in progress
- The debt ratio
- The rest to live
The calculation of indebtedness takes into account the ability of the guarantors to cover the monthly payments of the defaulting borrower . This is why it is very difficult to stand surety when you have credits in progress since you must have the ability to repay in addition to the deadlines of the home loan of the bonded if the latter was no longer facing.
The situation of borrowers is considered too precarious
When the situation involves too much risk, the bank generally refuses to grant the mortgage, despite the concurrence of bonds. The probability of defaulting borrowers plays a very important role in the decision because the bank will not rely solely on the financial ability of the surety to make a decision.
It is therefore primarily the elements that make up the folder of borrowers that matter. It will therefore be necessary that the debt is correct, that the remainder to live allows all the members of the household to live normally and that the professional situation ensures regular income.
The assistance of a surety will eventually be used to compensate for the insufficiency of an element of the file as it is the case when one of the borrowers is in trial period or when the debt ratio slightly exceeds the threshold of 33%. In any case, the risk can not be based mainly on the income of the surety .
What to do in case of refusal
Everything will of course depend on the reason mentioned by the bank. If the reason for refusal is too much debt, it may be necessary to revise your real estate project down. Also try to redo your financing plan with a longer duration. Most mortgages have modularity clauses that allow you to increase monthly payments and shorten the duration.
If you have a relationship of trust with the guarantor (family members, for example), you may consider that they are co-borrowers. In this case, their situation is analyzed in the same way as yours since the repayment of the mortgage is based on the accumulation of the income of all the borrowers.
This solution can however bring some complications, especially in case of succession. In the event of death, the heirs may claim that the sums paid by the parents to repay the mortgage are deducted from the estate of the child who benefited from it.