What is a Rental Guarantor and Do I Need One?
In today’s cut-throat rental market, lease applications require you to submit a background check, proof of income, credit history and more. However, if you are a first-time renter or don’t have the financial proof to qualify for a property, a guarantor may be the ideal solution. PRDNationwide is the real estate agent Canberra residents turn to for a range of real estate services including residential sales, commercial sales, leasing, property and asset management. If you have been looking at Canberra properties for rent, but can’t get approved for a lease, it might have been suggested to you to find a guarantor. So, what exactly is a guarantor, and how can they help?
What Is a Guarantor?
A guarantor is a responsible party that agrees to sign on to the lease on behalf of someone else, assuming the responsibilities defined in the lease (most notably the payment of rent) in the situation where the tenant is unable to meet the obligations. This guarantee gives a landlord the peace of mind that they have the protection of a third party in the event of renter insolvency. A guarantor must possess an exemplary credit history and have sufficient income to cover the rental payments if/or when the renter defaults.
When Might You Need a Guarantor for A Lease?
Every landlord wants to lease their property to tenants who are responsible, will look after the dwelling and will make rental payments in a timely manner. A guarantor may be the key to securing the property you desire, especially if you:
- Are renting for the first time and have no rental history
- Are a long-time renter with a bad reputation as a tenant, a guarantor can help increase your chances of getting approved
- Have a bad credit rating
- Have a low income. If the rent is more than one third of your monthly income, then your landlord or property manager may require you to have a guarantor on your lease
- Have unreliable employment history. Landlords want to make sure that you have a stable source of income.
A guarantor can solve some of these problems by guaranteeing to the landlord that the rent will be taken care of in the event that you are unable to.
How to Find a Guarantor?
Parents are a common form of guarantor. Close friends or other family members are also good options, but it’s important that you’re comfortable with this person taking financial responsibility for your rent if you default on payment. Your guarantor must be financially stable, responsible, and have excellent credit, as well as be comfortable agreeing to take on the responsibility for you. If you have a close relationship with someone like this, it’s in your best interests to ask them as it will go a long way in helping you secure rental properties in Canberra.
If you choose to use a guarantor when applying for a rental property, make sure that you are trustworthy and stick to your promise to your guarantor that you will always pay your rent on time, so they won’t have to step in.
PRDNationwide has a diverse portfolio of Canberra properties for rent, and we can help with all the advice you need to secure your dream rental home. Browse our listings online now or get in touch with our friendly team by calling (02) 6262 5232.