Mortgage basics
Acting as guarantor for a relative’s mortgage: what you are actually signing
Acting as guarantor means paying a relative’s mortgage from your income and assets if they cease to pay. What you must check before signing.
Acting as guarantor for a relative’s mortgage means committing to the lender to pay their debt from your income and assets if they cease to pay, for the amount and duration stated in the deed. The requested guarantee is almost always joint and several: it cannot require the lender to pursue the borrower first. The guarantor is neither insured nor the owner, and their commitment may weigh on their own credit projects.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- Acting as guarantor commits you to pay a relative’s debt from your own income and assets if they cease to pay.
- The joint and several guarantee, almost systematic in mortgage lending, waives the benefit of discussion and the benefit of division.
- The commitment is written in the guarantor’s own hand, in words and figures; in case of disagreement, the wording in words prevails.
- A commitment manifestly disproportionate to the guarantor’s income and assets at the time of conclusion is reduced, not annulled.
- The guarantor is neither insured nor the owner of the property, and their income is not included in the repayment capacity calculation, unlike the co-borrower.
Acting as a guarantor means promising to repay, on behalf of a relative, using your income and assets, for the entire duration of the loan. Check the deed before signing, or help in another way. See the basics of a mortgage and the guarantees of a loan.
Acting as a guarantor: what exactly does this commit you to?
Paying another person's debt if they do not pay it, for the amount and duration written in the deed, using your assets.
- It is not a formality: the lender intends to use it.
- You must pay the amount written, generally the capital, interest and fees.
- You cannot withdraw: under Article 2313 of the Civil Code, the obligation is extinguished by the same causes as other obligations, or with the debt.
Simple guarantee or joint and several guarantee: which one are you being asked for?
The guarantee is either simple or joint and several (Article 2290 of the Civil Code). The simple guarantor retains two defences:
- the benefit of discussion (Article 2305): the lender first pursues the borrower;
- the benefit of division (Article 2306): each guarantor pays their share.
| Simple guarantee | Joint and several guarantee | |
|---|---|---|
| Whom must the lender pursue first? | The borrower, if you invoke the benefit of discussion | You cannot require this: this benefit is closed to you |
| For what amount, if there are several guarantors? | Your share, if you invoke the benefit of division | The whole, if the guarantors are jointly and severally liable among themselves or have waived this |
In a mortgage, the deed is almost always joint and several. Have your commitment confirmed by a notary or a lawyer.
What your guarantee covers in the application
A recent change in your professional situation, a low deposit (see the purchase without a deposit) or the refusal of a guarantee body. Ask: “Does your guarantee replace another form of security, or supplement it?”
Does your guarantee affect your own projects?
Yes, it can: you declare it when you borrow. Some lenders count the guaranteed instalment in your outgoings.
35,00 % ()A nearby project is discussed before signing. See what the lender looks at.
Before signing: the five points to check
- The amount, written in your own hand. Article 2297 of the Civil Code requires this under penalty of nullity of the undertaking. The sum in words prevails.
- The duration, to be specified in writing.
- The word “joint and several”: renouncing the two benefits is written in the mention (Article 2297).
- The proportion with your means. A guarantee that is manifestly disproportionate is reduced (Article 2300). Complete the asset sheet accurately.
- The annual information on what remains due (Article 2302) and on the first payment default (Article 2303). Failing this, the lender loses the interest and penalties.
The borrower’s insurance of your relative protects you first: ask for their cover (borrower’s insurance).
Guarantor or co-borrower: these are not the same position
| Guarantor | Co-borrower | |
|---|---|---|
| Are they a debtor of the loan from the very first day? | No, only if the borrower fails to pay | Yes |
| Do their income figures form part of the affordability calculation? | No | Yes |
| Are they covered by the borrower insurance? | No | Yes, for their share |
| Do they become the owner of the property? | No | Only if the purchase deed so provides |
Helping without signing
- An alternative guarantee: see who provides the guarantee.
- A contribution: the family gift.
- A rescaled project: a lower price or a different term.
Prepare the file before any signature
I am a mortgage intermediary working under mandate. I take over the file without the guarantee, I ask the bank in writing whether it can be released, and I leave the legal reading of the deed to you with your notary. The documents · the fees.
Are you being asked to sign? Create your file or arrange a joint appointment.
Sources
- Légifrance — Article 2290 du code civil
- Légifrance — Article 2297 du code civil
- Légifrance — Article 2300 du code civil
- Légifrance — Article 2302 du code civil
- Légifrance — Article 2303 du code civil
- Légifrance — Article 2305 du code civil
- Légifrance — Article 2306 du code civil
- Légifrance — Article 2313 du code civil
- Légifrance — Article 2309 du code civil
- Service-Public.fr
- abe-infoservice.fr
- notaires.fr
- economie.gouv.fr/hcsf
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