What is the difference between a guarantor and a co-borrower: a detailed description, features, difference. How is a co-borrower different from a guarantor? Who are the co-borrower and guarantor

Financial institutions offer their clients a large number of banking products that can be used for various purposes. Various loan offers are quite in demand in 2020, allowing you to get the necessary amount of money as soon as possible. This is a guarantee that the pricing policy will not change during the accumulation of funds.

However, banks are not entirely willing to provide the borrower with large amounts. The chances of cooperation increase if the client of a financial institution resorts to the services of a co-borrower or guarantor (there is a fairly large difference between these concepts).

When help is needed...

Before concluding cooperation with a borrower, representatives of a financial institution are very carefully studying the credit history of a potential client. The final decision regarding the level of its solvency is made on the basis of a whole set of factors. This takes into account not only the amount of his salary, but also the length of stay at the last place of work.

If the borrower works in a single company for less than six months, then it will be very problematic for him to get a loan for a large amount. The bank may make concessions if the cooperation agreement includes a clause on attracting a co-borrower or guarantor.

The functions of a guarantor may be assumed by a natural or legal person. Quite often, this role is played by the company in which the borrower works. The option of cooperation with the involvement of a guarantor is beneficial not only for the bank, but also for the borrower himself. If the firm in which he works acts as a guarantor, then this is a guarantee that he will not be fired until the full repayment of the loan debt. Thanks to this, the client of a financial institution can expect to receive a sufficiently large amount.

Types of liability to the bank

Differences between the guarantor and the co-borrower can not be detected immediately. In both cases, the parties are directly responsible to the bank under the loan agreement. But the type of this responsibility may be different.

Joint responsibility. This is the name of full responsibility, which is transferred to the guarantor in case of violation by the borrower of the payment schedule. Bank representatives have the right to apply for debt collection immediately after the first delay.
subsidiary liability. This is a partial liability. In this case, the obligation to repay the credit debt is transferred to the guarantor only if the solvency of the borrower is fully proven.

Rights and obligations of the guarantor

The question of how a guarantor differs from a co-borrower is relevant for many potential bank customers. In any case, you need to know that a third party has not only obligations to the lender under a certain set of circumstances. The rights for the guarantor are also provided for by law.

What can the bank require from the guarantor?

The guarantor is a full-fledged party participating in the loan agreement. He can fully or partially assume obligations to pay the existing debt. The drawn up agreement must necessarily contain a clause on what liability the guarantor can be held - subsidiary or joint and several.

In the event that the main payer fails to fulfill its direct obligations to repay the loan debt, the bank has every right to apply to the guarantor with the following requirements:

pay a penalty for late payment;
pay the principal amount;
to pay the amount of the court penalty;
pay the accrued interest for the fact of delay in payment.

Moreover, the bank may require the guarantor to repay the debt at the expense of funds received from the sale of existing movable or immovable property. Failure to fulfill payment obligations will leave a mark on the credit history of not only the borrower, but also the guarantor, so if you subsequently want to apply for a loan, some difficulties may arise.

What rights does a guarantor have?

All rights of the guarantor are spelled out in Art. 365 of the Civil Code of the Russian Federation. Provided that the guarantor has fully fulfilled all his obligations to the bank, he may require the borrower to compensate for all losses incurred by him. At the same time, the bank must without fail provide him with all the rights and documents in which the requirements for the debtor are clearly marked. This is possible only if the guarantor has fully assumed the obligation to repay the debt.

In this case, the guarantor may be released from obligations to repay the loan. This is done in such cases:

the death of the borrower;
making changes to the terms of lending by the bank (without prior agreement with the guarantor);
the period specified in the surety agreement has expired;
the debt is transferred to a third party without the written consent of the guarantor;
the borrower is an organization that ceased its activities due to liquidation.

It should be noted that the law does not provide for any benefits for a person acting as a guarantor. The latter fully assumes all obligations to repay the existing debt. Only a person with an appropriate level of solvency can act as a guarantor. Making monthly payments should not adversely affect the well-being of the payer's family.

Important! The obligations of the guarantor may be inherited. In this case, the legislation provides for some relaxations in the repayment of debts. The debt is paid if the heir has decided to enter this inheritance and the amount of the debt does not exceed the total amount of the inheritance.

Rights and obligations of a co-borrower

It is very difficult to understand the difference between a co-borrower and a guarantor. Mortgage can be provided with the direct participation of the first and second. A co-borrower, like a guarantor, has its own rights and obligations. Only in this case they will be somewhat different.

Obligations of a co-borrower

The co-borrower and the borrower are equal participants in the transaction. The co-borrower is jointly and severally liable. In the event that the borrower fails to fulfill its direct obligations to the bank, the co-borrower must assume this responsibility.

You can become a co-borrower voluntarily or by force. The latter case is relevant when one of the spouses issues a mortgage.

To obtain a loan, you can attract several co-borrowers, which can be:

adult children;
parents;
other relatives;
other persons meeting the requirements of the bank.

Among the mandatory conditions put forward to the co-borrower is insurance. The amount of insurance is determined by the measure of responsibility for the payment of the loan and is set on an individual basis. Thus, upon the occurrence of an insured event, the insurer does not repay the entire part of the debt, but only that which was paid by the client of the company.

Co-borrower's rights

A co-borrower may claim a part of the apartment purchased on credit. The guarantor, unlike him, only fulfills the guarantee obligation to repay the loan, but cannot position himself as the future owner of the property.

Guarantor and co-borrower - find five differences

The differences between a co-borrower and a guarantor are not only in the fulfillment of loan obligations, but also in the rights that the participants in the transaction can count on.

In this case, the borrower in any case remains the winner, since the probability of granting a loan when a third party is involved increases significantly. Below are the main differences between a co-borrower and a guarantor.

Guarantor	Co-borrower
The amount of income is not taken into account and does not affect the size of the loan.	The income of the co-borrower has a direct impact on the amount of the loan that the bank can provide.
The obligation to repay the loan can be transferred to the guarantor only by a court decision.	Delay in payments by the borrower automatically entails the need to repay the debt by the co-borrower. It is not necessary to wait for a court decision for this.
The level of solvency of the guarantor must be high enough so that he can independently repay all debts on the loan.	The solvency of the borrower and co-borrower is summed up.
The guarantor assumes obligations only if the borrower is declared insolvent.	The co-borrower assumes obligations under the loan agreement immediately after signing all the papers.
The guarantor does not have the right to receive housing in the property. He is the guarantor of the fulfillment of obligations on credit debt.	The co-borrower, at will, may become the owner of the acquired movable or immovable property.

Video: About the guarantor and co-borrower

What is the result?

The question of which is better - a co-borrower or a guarantor can have several answers. Much depends on who asks this question - the borrower or the third party to the loan agreement. It is important to remember that agreeing to act as a borrower or guarantor, the participant in the transaction falls a huge responsibility. And often the fulfillment of credit obligations does not depend on him alone!

terms

According to the conditions that banks impose on the execution of individual loans, it is possible to involve a guarantor and / or a co-borrower. If a co-borrower and a guarantor, or one of them, is attracted by a bank for a loan, this means that there are some significant differences in their tasks. What is the difference between co-borrower and guarantor and in what cases do they apply?

To understand the difference between a co-borrower and a guarantor, let's first look at the definitions of these terms:

Guarantor- this is a person who assumes obligations to the creditor of another person to be responsible for the fulfillment by the latter of all his obligations under the loan, which is formalized by a suretyship agreement.

Co-borrower- this is a person who, together with the main borrower, is responsible to the lender, i.e. to the bank for repayment of the loan in full, i.е. agrees to be jointly and severally liable for the repayment of the loan.

At first glance, these terms have similar meanings, both are responsible to the creditor for the loan, however, this is not exactly the same responsibility. That is why banks sometimes offer the borrower, instead of attracting a guarantor, to attract a co-borrower - it is easier for the bank to repay the loan at the expense of the co-borrower.

So, the difference between a co-borrower and a guarantor is as follows:

	Co-borrower		Guarantor
1.	The income of the co-borrower is taken into account in calculating the maximum amount of the borrower's loan, thereby increasing its size. A co-borrower is involved if the borrower's income is not enough to obtain the required loan amount.	1.	The guarantor's income is not included in the calculation of the borrower's maximum loan amount and does not affect the loan amount.
2.	The solvency of the co-borrower is added to the solvency of the borrower and, depending on the purpose of the loan, can ensure the repayment of the entire loan or only part of it.	2.	The solvency of the guarantor must necessarily be sufficient to independently repay the entire loan with interest.
3.	The co-borrower, together with the borrower, signs the loan agreement and assumes the same rights and obligations under the loan as the borrower. And in the case of obtaining a loan for the purchase of real estate, the co-borrower has the right (optional) to become a co-owner / owner of the property purchased under the loan.	3.	The guarantor signs the surety agreement, i.e. acts as a guarantor of the borrower, and assumes obligations to repay the loan and interest if the borrower and / or co-borrower cannot or do not want to do this. When applying for a loan for the purchase of real estate, the guarantor does not have any rights to the housing being purchased, but can try to get it to reimburse its loan costs, but only by a court decision.
4.	In case of delays in payment of the loan and interest by the borrower, the obligation to repay the loan automatically passes to the co-borrower.	4.	The obligation to repay the loan to the guarantor is transferred only by a court decision. The loan is repaid by the borrower, then by the co-borrower (if any), and only then by the guarantor (by court order).

A co-borrower, as well as a guarantor, can be a legally capable adult citizen Russian Federation, which meets the requirements of a particular bank. They are equally liable with their property if the borrower fails to fulfill its obligations.

Who is a co-borrower?

A co-borrower is a person who is jointly and severally liable to the bank for the repayment of a mortgage loan.

The Bank puts forward the same requirements for the co-borrower as for the main borrower. A co-borrower can be a spouse, a relative, or any other person. Banks allow attracting up to 5 co-borrowers. According to the legislation of the Russian Federation, when applying for a mortgage loan, a spouse is automatically a co-borrower. To avoid this, spouses must enter into a marriage contract between themselves. The co-borrower is obliged to submit to the credit institution the same package of documents as the borrower. His income is taken into account when calculating the financial condition, but the amount depends on the degree of relationship with the borrower.

The co-borrower bears the same responsibility under the mortgage agreement.

Who is a guarantor?

The guarantor is the guarantor of the fulfillment of the borrower's obligations to the bank. At the same time, he must have enough personal income to pay off the debt, but they are not taken into account when calculating the financial condition of the borrower. There are situations when, in the early years of a mortgage loan, repayment obligations fall solely on the shoulders of the guarantor. If he repays the loan on his own, he has the right of recourse to the main borrower. The guarantor has the right to file a lawsuit in court to compensate him for all the costs that were incurred to pay off the debt.

The main difference is that the guarantor is obliged to repay the debt only if the borrower has not fulfilled its obligations. The co-borrower is obliged, as well as the main borrower, to make regular payments on the mortgage loan.

Who to be better?

For both the co-borrower and the guarantor, a lending operation involves the risk of non-repayment of the loan by the main borrower. In this case, the bank, first of all, will turn to the co-borrower. In this situation, the guarantor wins. If a co-borrower is involved in the loan transaction, then the likelihood that the guarantor will have to repay the debt is reduced.

But the co-borrower certainly has more rights. If the guarantor can return the funds spent on paying off obligations to the bank only by going to court, then the co-borrower secures his rights even before the loan is issued. For this you need:

Register real estate in joint ownership. If the borrower and co-borrower are a married couple, then the property is joint property, according to the law.
Conclude an agreement to compensate for the funds spent by the co-borrower through partial or complete re-registration of real estate on him.
Draw up an agreement, which will stipulate that after the repayment of the mortgage loan, housing will be re-registered for two, taking into account the financial costs of each.

That is, in fact, a co-borrower under a mortgage agreement can be a full owner of residential real estate. In addition, the co-borrower can apply to the tax office for partial reimbursement of costs.

The guarantor actually has only duties. And to resolve the issue with the borrower in case of repayment of the debt to the bank, he will be able only by going to court. Therefore, it is worth agreeing to a guarantee only if there is confidence in the borrower. The co-borrower has more rights, but these rights must be documented even before the loan is received.

Do you know how many friends and acquaintances I have who acted as co-borrowers or guarantors in a mortgage and are forced to pay money for someone else's property? Yes, his own money for someone else's property, because the main borrower announced that he could not pay. I have many such acquaintances. Do not increase their number. Read what the co-borrower and the guarantor are responsible for and how they differ from each other.

Who is a mortgage co-borrower

A mortgage co-borrower is a person who has common loan obligations with the borrower. The co-borrower is an equal participant in the concluded loan and property transaction. He has the same rights to the mortgaged property as the borrower. But the responsibility is the same.

According to the current legislation of the Russian Federation, the spouse of the person being credited automatically becomes a co-borrower. If you are married and have applied for a mortgage, your spouse becomes a co-borrower, even if he has no income.

The co-borrower can also be a relative or friend of the borrower.

If the spouse does not want to be a co-borrower, you need to conclude a prenuptial agreement and discuss these details.

The co-borrower is responsible for the timely payment of the mortgage loan on the same terms as the main borrower. In case of refusal or termination of payments, the bank turns debt collection on the second borrower.

Bank conditions for a co-borrower

the bank takes into account the income of the co-borrower, which allows you to increase the maximum loan amount
the co-borrower can repay the entire amount of the loan or only a part
if the main borrower fails to repay the debt, they are automatically transferred to the second borrower
the co-borrower is an equal participant in the transaction and has the right to a share of the acquired property. The shares are determined by the consent of the persons being credited. Important! If one of the borrowers renounces his share of the apartment, the obligation to repay the loan is not removed from him.

Who is a mortgage guarantor

A guarantor is a third party when applying for a loan, which, in the eyes of the bank, is a guarantor of the return of funds. The guarantor provides obligations under the loan, which increases the borrower's chances of a favorable decision of the bank.

What is the difference between a guarantor and a co-borrower

The income of the guarantor is not taken into account when applying for a mortgage. But the guarantor must be solvent in order to be able to repay the entire debt to the bank over time, including mortgage interest. That is, the guarantor must have officially confirmed income.

Any person, in a given life situation, may be confronted with the need to apply for a loan. The required amount, especially for mortgage (housing) lending, is sometimes too large for the bank to take the risk of issuing it to one person, without maximum security for possible losses.

Such interim measures include guarantees and the involvement of citizens as co-borrowers. Let's find out if the co-borrower and the guarantor are identical to each other, what are their differences?

Who are the co-borrower and guarantor?

First, we need to define these terms.

In the Civil Code of the Russian Federation there is a concept " borrower." This is a citizen who, under the terms of a loan agreement, takes money or things from another citizen or legal entity, while pledging to return an equal amount of money or the same number of things within the prescribed period.

Here is a term such as co-borrower" is not found in the legislation of the Russian Federation, but at the same time it is widely used by banks when concluding loan agreements.

Co-borrower- this is a citizen who is on an equal footing with the borrower, a party to the loan agreement, having equal rights with him and fulfilling obligations to return the amount of money and pay interest. There can be two or more co-borrowers, which is fixed by the internal regulations of each bank.
Guarantor- this is a citizen who has assumed the obligation to the creditor of another citizen to answer for non-payment of the loan in whole or in part. The concept of "guarantee" and its fundamental principles are enshrined in law.

Rights and obligations of a co-borrower

The borrower and co-borrower have equal rights and obligations under the loan agreement. For example, in mortgage agreements, these persons are indicated as one party to the agreement, and so they are called “co-borrowers”. They must return to the creditor (bank) the amount received and pay interest in joint and several liability, which means their joint responsibility.

In addition, in mortgage lending, the bank singles out the title co-borrower from the co-borrowers, the person who acquires the property in common ownership and performs on behalf of the co-borrowers, with their common consent, the actions to formalize, obtain and service the loan. This is one of the spouses when applying for a mortgage.

The co-borrower participates in the conclusion of the loan agreement in the following cases:

If the borrower does not have the proper level of income to apply for a loan, or income at all. Attracting a working co-borrower, whether it be a spouse or another person, will increase the total income, not only the chances of obtaining a loan, but also, if necessary, loan funds will increase significantly.
The obligation to become a co-borrower rests with the second spouse under the mortgage agreement by virtue of the rules of the Family Code of the Russian Federation, regardless of whether the spouse-co-borrower currently has a job. Of course, in this case, the first spouse provides the proper amount of income.

Rights and obligations of the guarantor

A citizen is not limited in the choice of a guarantor, it can be both an individual and a legal entity.

According to the civil legislation of our country, the guarantor is liable to the creditor (bank) only if the debtor has fulfilled only partially or has not fulfilled at all the obligation that is secured by this guarantee. But the law provides that there may be conditions different from these, which are prescribed in each specific contract.

This literally means the following: if the borrower for some reason does not pay it to the bank in full or underpaid a part, then this obligation passes to his guarantor. Not only the debt is subject to payment, but also the accrued interest, as well as the expenses incurred by the bank in collecting the debt.

At the same time, the guarantor cannot be called a co-debtor, since the guarantee is a separate obligation of the guarantor to the creditor.

You need to know that the surety agreement is drawn up in a written document, otherwise it is invalid.

The guarantor may exercise his right not to perform the obligation as long as the creditor has the ability to recover from the indebted borrower. The legislator gave him the right to put forward his objections to the creditor, instead of the debtor, even if the latter recognizes the debt or refuses it, which to some extent protects the guarantors from the hasty claims of banks.

If, nevertheless, the recovery from the guarantor has occurred, then now he has all the rights of the creditor (the right to demand debt, interest and compensation for all losses incurred), which he can implement in court.

The difference between a co-borrower and a guarantor

These subjects of credit relations fulfill the obligations under the loan, and are responsible for its non-payment.

So what is the difference between them:

First of all, the difference is not only in the terminology, but also in the fact that the guarantor does not have the rights that are vested in the co-borrower, who has the same right to the amount received on credit (or housing) when drawing up a loan agreement, like the borrower. The guarantor cannot be a co-owner of either the dwelling or the funds being credited.
When issuing a loan, its amount and term of issuance are affected by the amount of income of both the borrower and the co-borrower. The income of the guarantor does not affect such factors., but his solvency is still assessed so that he can pay off the debt on his own if necessary.
The responsibility of the guarantor, unlike the co-borrower, arises only if the borrower for some reason has not paid the bank the debt in full or in part. The co-borrower is also obliged to make systematic payments on the loan.

Given the above, we can conclude that it is incorrect to identify the guarantor and co-borrower. If you need to choose a particular role for yourself, it will be useful to understand the concepts presented and the differences between them.

Do you have any questions? Ask a lawyer!