What is the difference between the co-borrower and the guarantor. What is the difference between a guarantor and a co-borrower for a bank loan? The specific difference between the guarantor and the co-borrower on the mortgage

The bank may refuse to issue a mortgage loan. The borrower will need to engage a third party to receive the money. The co-owner and the guarantor, the differences between which at first glance do not differ much, can play a key role in this situation.

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

Mortgages are the most difficult type of lending. The financial and credit institution wants to receive all guarantees for the return of funds and profit from interest. In some cases, banks are unable to provide the client with the desired amount. The organization needs additional confidence in the citizen's ability to pay.

The co-borrower and guarantor can allow the client to borrow more. Not all citizens correctly interpret these concepts. Some people assume there is no difference. This is not true. Before seeking help from a third party, you need to understand what role the person will play. There are many nuances and subtleties, in particular, the difference between the co-borrower and the guarantor in the responsibility and tasks that they face.

Having decided to take this measure, which is significantly widespread in the banking environment, you need to be well versed in the issue. Otherwise, a difficult situation may arise.

Types of responsibility

Differences between the co-borrower and the guarantor are not always obvious. Especially when the client is not very familiar with such concepts. In one thing they are similar - the direct responsibility for paying off the debt lies with these people. The type of responsibility can be:

• Solidary. In this case, the guarantor will be obliged to pay the debt at the first delay;
• Subsidiary. The guarantor must partially pay off the debt. It is necessary to carry out the payment procedure in the absence of the main client's solvency.

What is the responsibility of the co-borrower and guarantor to the bank

The second option is chosen more often. It reduces the risk for the guarantor. The mortgage is issued for a long term, usually more than 10 years. During this time, the client can at least once, but not complete the transaction to the bank on time. Consequently, according to the solidary type, the guarantor will have to take responsibility upon himself. Many people prefer to avoid such situations.

In some cases, the bank does not provide a choice. The guarantor and co-borrower may be faced with a fact. This rarely happens. As a rule, a similar situation occurs when the bank is very uncertain about the main client.

Obligations and rights of the surety

A citizen who is going to act as a surety should familiarize himself with the basic rules. This person is a full-fledged party to the contract. Carries out payments in full / in part. Depends on the signed agreement. If the main client fails to comply with the terms of the agreement, the bank may require the guarantor to:

• Deposit money (penalty) for late payment;
• Pay the main debt of the client;
• Pay the forfeit of the court plan;
• Pay the interest forfeit.

In some cases, the bank puts forward a demand to pay off the debt through the sale of the property of the surety. It all depends on the points specified in the contract. The main advantage is the ability to reimburse the amount spent through the main client. Article 365 of the Civil Code of the Russian Federation.

You can get rid of obligations for the following reasons:

• Death of the main borrower;
• Changes were made to the initial conditions (in some cases, the bank is entitled to this procedure unilaterally);
• The term of the contract has expired.

Most of the rights depend on the signed contract. The difference between the co-borrower and the guarantor in this case is minimal. Be sure to read it carefully.

Obligations of the co-borrower

The main difference from the guarantor is that the co-borrower is the equal owner of the acquired housing. Subsequently, you can refuse. All responsibility is transferred to him in case of insolvency of the main borrower. Deal type - joint and several.

Insurance is a prerequisite. The main right is the ownership of part of the loaned housing. The co-borrower may be:

• Children who have reached the age of majority;
• Parents;
• Relatives;
• Persons who meet the requirements of a financial institution.

Thus, the distinction between co-borrower and surety may not seem profound. This is not true.

The main borrower wins in both cases. This method is used by many citizens. Often spouses act as co-borrowers. In such a situation, this is a convenient and correct solution. It is more convenient to make payments.

Conclusion

Differences between co-borrower and surety may seem frivolous. In some cases, this is true. Obligations, type of responsibility and much more are prescribed in the contract, which is concluded between the parties. The main thing is to study it carefully.

January 2019

Bank loan offers are very attractive for the category of citizens who cannot afford quite large financial acquisitions. Consumer lending is a good opportunity to solve temporary material problems. Regardless of the method of obtaining a loan, the involvement of third parties in this process - parties to the agreement, who are able to guarantee compliance with its terms, is almost always a mandatory requirement of the bank. What is the difference between the co-borrower and the guarantor - this is what today's material is about.

Who is a loan co-borrower?

Under the legal definition "co-borrower" is a person who, together with the bank's client, is ready to bear responsibility to the creditor for the reimbursement of borrowed funds in one hundred percent. These conditions are part of the content of the loan agreement.

Note! If one of the spouses signs a loan agreement with the participation of a co-borrower, then the other spouse becomes such automatically. This is a condition of all banks. What will be his contribution to the loan payments is also indicated in the document. As soon as the direct debtor refuses to pay, this function is transferred to the person who is his co-borrower.

What is a surety?

A guarantor is a person who is ready to play the role of a guarantor of compliance with the debtor's financial obligations to the company that issued him a cash loan. He automatically assumes all contractual rights and obligations stipulated in the loan agreement, and bears personal responsibility for them in court proceedings.

The guarantor's liability may be as follows:

• subsidiary - the need to repay the debt if the borrower cannot do it on his own (occurs upon the fact of the debtor's financial insolvency);
• joint and several - if the main debtor cannot further repay the debt, then these powers are assumed by the co-borrower and the guarantor in equal shares.

Rights and obligations of the co-borrower and surety

The borrower differs from the guarantor by the opportunity to have equal ownership rights with the debtor to property values ​​purchased with credit funds. At the same time, he is fully charged with the joint and several obligation to pay outstanding current contributions. All clauses of the agreement equally apply to both the main borrower and his contractual backup.

As for the loan guarantee, then everything looks somewhat different. If it is impossible to pay planned contributions, it is the guarantor who is obliged to repay them. By law, he has the right to do the following:

• close the delay and continue to return funds to the bank within the existing payment schedule;
• close contractual obligations with one early installment.

If the company no longer has claims against this party to the agreement, he has no right to rely on full or partial compensation for damage, and the collateralized property objects do not pass to him. The lender has the right to oblige him to pay not only for the body of the debt, but also for delays, penalties, interest rates on the loan.

The guarantor is released from the undertaken obligations only in exceptional cases:

• death or death of the borrower;
• unauthorized introduction of additional clauses by a commercial company into the contract without notifying all parties to the process;
• when transferring the residual amount of debt to collection firms without his written consent - in this case, all obligations of the guarantor to the bank or collectors are canceled automatically.

Differences between the co-borrower and the surety

For most people unfamiliar with the intricacies of banking, these two concepts do not represent a significant difference, but in reality this is far from the case. The main difference between the co-borrower and the surety arises from the principles of responsibility of each of them for their contractual obligations. And this measure is different for them. It is for this reason that commercial companies are more willing to conclude transactions with the involvement of a co-borrower than a person acting as a guarantor under the agreement.

So, the fundamental difference between these two concepts is as follows:

1. The level of solvency of the co-borrower is taken into account when determining the maximum possible loan amount, potentially changing it upwards. The purpose of the person who has assumed this function is precisely the ability to increase the lending threshold when the applicant's income does not allow him to do it on his own. But the material wealth of the guarantor is not taken into account anywhere and cannot affect the final amount of the loan.
2. The aggregate income of the co-borrower is added to the income of the person who directly draws up the loan, and, based on the intended purpose of the borrowed funds, is able to guarantee either full or partial payment of them to the bank. In the second case, the wealth of the guarantor should allow him, if necessary, to take on the payment of interest and the body of the loan in full.
3. The borrower and the person who received the money are legally equal in rights and obligations to the financial institution with which they signed the agreement. This allows the co-borrower to move into the role of the share owner of the subject of credit. The surety does not have such rights and will not be able to compensate his own costs in this way if the debt has to be paid to him.
4. If there are delays under the loan agreement, the function of the payer is automatically transferred to the co-borrower. The guarantor begins to pay the bills only upon the fact of a court decision. Until this moment, banks have no right to demand money from him. If, within the framework of the agreement, co-borrowers also participate in it, then the legal rule of the third priority works, when the borrower pays the debt first, then the co-borrower, and only then the guarantor is involved.

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Banking organizations are literally full of all kinds of loan offers. However, not everyone has the opportunity to take a large amount of money only by providing documents proving their solvency. Often, serious transactions require a guarantor or co-borrower, such as a mortgage. A very relevant question arises: what is the difference between the co-borrower and the guarantor? Let's find out now.

Types of liability to the creditor

Important! It should be borne in mind that:

• Each case is unique and individual.
• Careful study of the issue does not always guarantee a positive outcome of the case. It depends on many factors.

To get the most detailed advice on your issue, you just need to choose any of the options offered:

To understand the difference between third parties (guarantor or co-borrower), one should initially consider the types of liability arising to a bank lender under a loan agreement, namely:

1. Joint and several liability is one of the types of civil liability of a debtor to a bank. It implies full responsibility, i.e. in case of violation by the main borrower of the terms of the contract (for example, a long delay), the lender has the right to collect the debt from the guarantor in full or in part.
2. Subsidiary liability - represents the right to collect uncollected debt, or rather part of it from the guarantor. It is applied if the insolvency of the borrower is proved by the judicial authority. Liability of this nature is additional and is governed by Art. 363 of the Civil Code of the Russian Federation.

Difference between guarantor and co-borrower

Many potential clients of the bank are interested in the difference between a surety and a co-borrower. To find out, consider the specific rights and obligations of the guarantor, and then the co-borrower. So.

What can the bank demand from the guarantor?

The guarantor is one of the parties to the loan agreement between the bank and the borrower. Based on Art. 364 of the Civil Code of the Russian Federation, this person also enters into an agreement with the creditor for his main obligations. Sometimes the guarantor enters into a separate agreement with the main debtor, which, in principle, is not required, but takes place.

A party to a transaction may, in whole or in part, assume obligations to repay the loan under certain circumstances. In the agreement concluded with the bank, there must be a clause on which responsibility the guarantor is involved when signing the document.

In case of non-payment of the payer of the loan debt, the obligations of the guarantor include the following:

1. Payment of penalty for late payment.
2. Paying off the balance of the debt.
3. Repayment of the forfeit imposed on the basis of a court decision.
4. Payment of accrued interest on the loan.

In some situations, the bank has the right to demand payment of the debt from the funds received from the sale of the guarantor's personal property. And if the third party to the agreement does not want to fulfill its obligations, the credit history will be damaged. In the future, the guarantor may have problems obtaining his own loan.

What rights does the surety have under the law?

The rights of a surety who has fulfilled his obligations are regulated by law (Article 365 of the Civil Code of the Russian Federation). The guarantor will not break the law if, having fulfilled his debt, he demands from the borrower the return of the losses incurred by him, up to the payment of interest on the loan. The bank, in turn, must issue the guarantor documents confirming his rights of claim. But this happens, let us note, if the guarantor has paid off the entire debt of the bank client. The guarantor can get rid of the heavy burden of the loan if the following circumstances arise:

1. The bank made changes to the terms of lending without obtaining the written consent of the guarantor.
2. The borrower's debt was transferred to another person, and the guarantor did not sign anything.
3. The term of the surety has expired in accordance with the loan agreement.
4. The organization acting as a borrower to the bank has been liquidated.
5. The main debtor died.

By the way, surety obligations have the power to pass by inheritance, but completely different conditions apply here. For example, the payment of a debt by the heir is made only after the entry of rights into the inheritance and in an amount not exceeding the total value of this inheritance.

And now we will consider the duties and rights of the co-borrower - a person who is responsible to the creditor on equal terms with the borrower and bears joint responsibility.

Obligations of the co-borrower

If the borrower's income is not enough to arrange a large loan, for example, for an apartment, co-borrowers are often attracted, the number of which can reach up to 4 people. The total amount of income of these citizens becomes a guarantee for the bank regarding the repayment of the debt. And, relying on Art. 45 IC RF, the spouse or spouse of the main borrower becomes a co-borrower automatically.

On a voluntary basis, adult children, parents, close relatives, friends, etc. are involved in “co-family”. The main thing is that these persons satisfy the requirements of the banking organization. So, bankers put forward a prerequisite for co-borrowers - to insure their life and health. The amount of such insurance is set individually and is determined by the measure of responsibility for the repayment of the loan.

Co-borrower rights

Perhaps the most important difference between the co-borrower and the guarantor is his right to a part of the debtor's apartment. When concluding an agreement with the bank, an item is assigned to which share each of the co-borrowers can claim. That is why, in most cases, only close relatives are involved in the transaction to avoid problems with property.

Attention: Even if the co-borrower refuses to participate in writing, this does not deprive him of his obligations to pay off the debt on the loan instead of the borrower. The responsibility of co-borrowers is legally enshrined in Art. 322 - 325 of the Civil Code of the Russian Federation.

The specific difference between the guarantor and the co-borrower on the mortgage

Let's summarize the final analysis of the differences between the surety and the co-borrower:

Any person, in one life situation or another, can face 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 giving it to one person, without maximizing possible losses.

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

Who are the co-borrower and guarantor?

First, you need to define these terms.

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

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

Co-borrower- This is a citizen who, on an equal basis with the borrower, is a party to the loan agreement, who has equal rights with him and who fulfills the 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 "surety" and its fundamental principles are enshrined in legislation.

The rights and obligations of the 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 this is what they call “co-borrowers”. They must return the amount received to the creditor (bank) and pay interest jointly and severally, which means their joint responsibility.

In addition, in mortgage lending, the bank from the co-borrowers allocates the title co-borrower, the person who acquires the property in common ownership, and performs on behalf of the co-borrowers, with their common consent, the actions for registration, obtaining and servicing 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:

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

Rights and obligations of the surety

A citizen is not limited in choosing a surety, he can be both an individual and a legal entity.

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

This literally means the following: if the borrower for any reason does not pay it to the bank in full or has underpaid a part, then this obligation is transferred 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 surety cannot be called a co-debtor, since the surety is a separate obligation of the surety to the creditor.

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

The guarantor can exercise his right to default on the obligation as long as the lender has the ability to collect from the debtor 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 hasty claims of banks.

If, nevertheless, the collection 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 in this case), which he can implement in court.

Difference between co-borrower and surety

These subjects of credit relations perform obligations on the loan, and are responsible for non-payment.

So what's the difference between the two:

1. First of all, the difference is not only in terminology, but also in the fact that the guarantor does not have the same rights as the co-borrower who has the same right to the amount received on credit (or housing) when drawing up a loan agreement as the borrower. The guarantor, however, cannot be a co-owner of either the dwelling or the credited funds.
2. When issuing a loan, its amount and term of issuance are influenced by the amount of income of both the borrower and the co-borrower.. The guarantor's income does not affect such factors, but his solvency is still assessed so that he can independently pay off the debt if necessary.
3. The responsibility of the guarantor, in contrast to 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 responsible for systematic payments on the loan.

Considering the above, we can conclude that it is incorrect to identify the guarantor and the 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.

Still have questions? Ask a lawyer!

Co-borrower.
A co-borrower is a person who, on equal terms with the borrower himself, assumes all responsibility. The bank evaluates the solvency of both the borrower and the co-borrower. The main purpose of attracting a co-borrower is to increase the loan amount, since the bank will take into account not only the borrower's income, but also the co-borrower.
Many believe that only relatives can act as co-borrowers. But this is a common misconception, which was formed on the basis of the fact that in most cases, the co-borrower is one of the spouses or parents. But in fact, any citizen who meets all the requirements of the bank can act as a co-borrower.
It should be emphasized that the co-borrower not only assumes the costs and risks of the loan, but also has equal rights to the object that was purchased on credit. If the co-borrower takes not formal, but real participation in the payment of the debt, then he has the right to demand the allocation of a share to him.
Basically, the need for a co-borrower arises when the borrower does not have enough own income to obtain the required loan amount. For example, a family is planning to buy an apartment with a mortgage. The loan application is submitted by the spouse, that is, he will be the main borrower, and in the contract the spouse will be indicated as the co-borrower. Moreover, both spouses are endowed with equal ownership rights to the acquired property.
It is worth noting that the loan agreement allows the participation of several co-borrowers, mainly up to five people. Each of them increases the maximum possible loan amount with their income. If a situation arises when the main borrower is unable to repay the loan, then all responsibilities are transferred to the co-borrowers.
Guarantor.
A guarantor is a party to a loan transaction that assumes obligations if the borrower cannot fulfill them. Of course, the bank assesses the solvency of the guarantor, but his income does not in any way affect the lender's decisions to issue the maximum bank loan. Individuals and legal entities can act as guarantors. If the borrower is unable for some reason to further repay the loan, then the guarantor assumes all obligations, but the guarantor does not have any rights to the loan object. Therefore, guarantors are advised to conclude agreements with the borrower on how he will settle accounts with him if he has to repay the loan for him. If, nevertheless, such a situation occurs, then the guarantor has the right to judicially demand from the borrower compensation for his losses.
If there are several guarantors, then the bank has the right to demand the repayment of the debt from any of them. If there are guarantors and co-borrowers for the loan at the same time, then if the loan debt is not repaid, the order of imposition of foreclosure is as follows: the duty to repay the debt first rests on the co-borrowers, and only then on the guarantors.
Unlike the co-borrower, the guarantor is a kind of guarantor for the bank that the money will be returned. The main function of the guarantor is to control the borrowers over how they fulfill their obligations to the lender.
Differences
1. The co-borrower has the right to the object of lending, that is, it automatically becomes a full-fledged party to the loan agreement. But the guarantor can only claim his funds in court.
2. When attracting a co-borrower, the main borrower increases the credit limit by taking into account his income. The guarantor does not affect this parameter.
3. If viewed from the point of view of the law, then the guarantor and co-borrower are one concept. But the guarantor is a reserve responsibility, and the co-borrower is a joint responsibility.

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