HOW WELL DO YOU KNOW GUARANTOR METHODOLOGY AND REGULATIONS? FISCAL-WISE WWW.FISCAL-WISE.COM.MY Malaysia Home Loan: Guarantors

What is a Guarantor? Person who agrees to indemnify the holder of a loan all (borrower) or a portion of the unpaid principal balance in case of default by the borrower. Financial Institution Borrower Guarantor Borrows Money to

Person who agrees to indemnify the holder of a loan all (borrower) or a portion of the unpaid principal balance in case of default by the borrower.

Being a Guarantor?

Liabilities of a Guarantor Be held liable for liabilities of a borrower in accordance to the contract. Be requested to pay only if borrower defaults payment and financial institution calls upon the guarantor. The extent of the liability of a guarantor will be as specified in the guarantee document.

Be held liable for liabilities of a borrower in accordance to the contract.

Be requested to pay only if borrower defaults payment and financial institution calls upon the guarantor.

The extent of the liability of a guarantor will be as specified in the guarantee document.

Action Limitations Guarantor Discharges No action taken to the guarantor until a demand for action under the guarantee has been made. A demand may be served by hand, post or courier. Financial institution has 6 years from the date of first demand to take legal action against guarantor. After full payment of debt, including taxes and interests. Terms of guarantee has to be adhered to by the financial institution to enforce guarantee against the guarantor. Guarantor Limitations

Action Limitations

Guarantor Discharges

No action taken to the guarantor until a demand for action under the guarantee has been made.

A demand may be served by hand, post or courier.

Financial institution has 6 years from the date of first demand to take legal action against guarantor.

After full payment of debt, including taxes and interests.

Terms of guarantee has to be adhered to by the financial institution to enforce guarantee against the guarantor.

Common Problems Legal terminology too difficult to understand. Solution: Seek legal advise/consult banking officer. Questioning liability for increase financial facilities. Cannot happen without guarantor’s consent. Signature witnessing: Who should be? Financial officer, spouses are not allowed without independent advise. Bankruptcy: Can I be made if borrower defaults payments? Yes. Death of the borrower. Is the guarantor discharged? No. If the borrower cannot finish paying, the guarantor bears the cost.

Legal terminology too difficult to understand. Solution: Seek legal advise/consult banking officer.

Questioning liability for increase financial facilities. Cannot happen without guarantor’s consent.

Signature witnessing: Who should be? Financial officer, spouses are not allowed without independent advise.

Bankruptcy: Can I be made if borrower defaults payments? Yes.

Death of the borrower. Is the guarantor discharged? No. If the borrower cannot finish paying, the guarantor bears the cost.

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