When it comes to loans, sometimes you may need a financial ''hero'' to help you. That's often the role of a co-debtor. If you've heard the term or are considering taking on this role, it's good to know what it entails. Maib experts explain it in more detail.
What does it mean to be a co-debtor?
Imagine you're on a team and committed to a project. When discussing the co-debtor role, the project is the repayment of a loan, which you take on with someone close to you. If the primary borrower has difficulty repaying the loan, you commit to take over and complete the 'project' for them.
Who can be a co-debtor on a mortgage loan?
A co-debtor can be an individual whose income is taken into account, together with that of the loan applicant, when calculating the loan amount.
Not everyone can be a co-debtor. This can be the husband/wife or first-degree relative of the loan applicant.
The same categories of income are accepted as for borrowers, namely:
- salary received either in the territory of the Republic of Moldova or abroad;
- transfers from abroad from first-degree relatives;
- dividends received as founder of a company registered in the territory of our country, from the lease of real estate, from copyright, royalties;
- income from the following legal professions: attorney, notary, bailiff, legal expert, translator, mediator, registrar.
It is essential that this person trusts you and that you trust them.
Important details about the role of co-debtor:
- major responsibility: basically, you undertake to pay the debt yourself if the debtor cannot;
- it's a way for you to help a family member achieve a significant goal, such as buying a home, and if all goes well, you and the primary borrower can have a better loan score. Learn more about credit history here;
- in some cases, the co-debtor not only helps to obtain the loan, but may also benefit from the financed purchase (for example, in the case of buying a family home);
- after concluding a loan agreement, the co-obligor receives certain rights specified in the loan agreement. These may include requesting mortgage refinancing, obtaining information on the status of the mortgage account, arrears and penalties, etc.
It's, therefore, important to understand what this role entails before you take it on. And, as always, if in doubt, it's best to seek the advice of a financial expert. At maib, you will always find professional advice and support.
