Hi,

One of my ex-colleague who quit and is now having a business for the last 10 years is buying a house in his home town. His wife is employed and the loan is in her name. The property itself is worth only 6 Lakhs and he is making a down payment of 1 lakhs.. and GIC has given him a sanction of 5 lakhs loan..
But GIC is not disbursing the loan stating that they need a guarantee from someone having a salary in excess of 10000 per month and having 20 years of service left and not being a family member..

He has asked me for an guarantee.. I find this condition very odd.. and though. The amount is not huge, but GIC has an guarantee of the house, why a third party. Yes the woman is working for a small private firm. The official states that since it is in a small town and if she defaults, then they will proceed to recover the installments from the guarantor as it is administratively expensive to re possess the house
I find this condition extremely uncomfortable...

Has anyone encountered any such demand from an Institution before.. Dosen't the institution have a lien on the property.. Can they proceed against the guarantor. without staking a claim on the lien. Is it tenable in the court of law..

Thanks...
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  • One more thing.. since the loan amount is < 5 lakhs not many institutions are willing to consider the application.. so GIC
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  • Guys anyone has any ideas??
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  • Originally Posted by Sharpj
    Hi,

    One of my ex-colleague who quit and is now having a business for the last 10 years is buying a house in his home town. His wife is employed and the loan is in her name. The property itself is worth only 6 Lakhs and he is making a down payment of 1 lakhs.. and GIC has given him a sanction of 5 lakhs loan..
    But GIC is not disbursing the loan stating that they need a guarantee from someone having a salary in excess of 10000 per month and having 20 years of service left and not being a family member..

    He has asked me for an guarantee.. I find this condition very odd.. and though. The amount is not huge, but GIC has an guarantee of the house, why a third party. Yes the woman is working for a small private firm. The official states that since it is in a small town and if she defaults, then they will proceed to recover the installments from the guarantor as it is administratively expensive to re possess the house
    I find this condition extremely uncomfortable...

    Has anyone encountered any such demand from an Institution before.. Dosen't the institution have a lien on the property.. Can they proceed against the guarantor. without staking a claim on the lien. Is it tenable in the court of law..

    Thanks...


    Yes - Asking for a "Guarantor" was common practice some years back (in 1990s) against all kinds of loans by most banks. A guarantor is completely liable to pay back the Principle & Interest incase the original applicant defaults. (Even tho the property was mortgaged to the bank. According to the bank - disposal of property is last resort for them).

    I had a relative who had stood guarantor for his friend. The friend missed a few EMIs & the bank immediately sent a letter to the friend's employer to deduct the EMI from his salary! Fortunately the matter was sorted out & my relative did not suffer - but he vowed that he would NEVER become a guarantor for anybody ever.
    Thanks,
    Ajoshi
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  • Originally Posted by ajoshi565
    Yes - Asking for a "Guarantor" was common practice some years back (in 1990s) against all kinds of loans by most banks. A guarantor is completely liable to pay back the Principle & Interest incase the original applicant defaults. (Even tho the property was mortgaged to the bank. According to the bank - disposal of property is last resort for them).

    I had a relative who had stood guarantor for his friend. The friend missed a few EMIs & the bank immediately sent a letter to the friend's employer to deduct the EMI from his salary! Fortunately the matter was sorted out & my relative did not suffer - but he vowed that he would NEVER become a guarantor for anybody ever.
    Thanks,
    Ajoshi


    Yes, my father was guaranter to one of his friend few years back and it made us suffer a lot. The Bank officials used to visit our house at any time for the recovery. Finally they started recovering EMI from my fathers salary. My father somehow managed to get out of it with a smaller financial loss. So his advice to everybody is to always refrain yourself from becoming guaranter.

    However I heard that the rules have changed these days and guaranters are not completely at risk. Just check with a lawyer or CA if such is the case.
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