Suretyship is something that should not be taken lightly, here are some of the most important elements of suretyship that you need to know:

Suretyship (Standing in as guarantor/surity)! (EDS)

When sighning surity you are personally laible! When applying for a home loan with the bank, and your income and asset value does not cover the required loan you are applying for, the bank may ask you to get someone to stand as guarantor (suritor) for your loan, meaning that if you do not pay your debt, the surety becomes personally liable to pay your monthly installment to the bank .

Limited Suretyship and Unlimited Suretyship:

There are two types of suretyship which will define how much of the debt will be guaranteed by the surety. Limited suretyship has a maximum rand value and an unlimited suretyship has no maximum rand value. If you are the person signing surety for someone else, make sure that you read the agreement carefully and that you are prepared to pay the debt if this person does not.

Useful hints to look at before signing surety:

  • Understand the implications for standing surety for someone’s debt;
  • Know how much of the debt you are liable to pay either limited or unlimited;
  • Limit your suretyship to a specific amount.

Security in the form of a policy will also be considered by the creditor if the current value on the policy is acceptable in terms of the loan amount one is requesting.

It is advisable to been informed of the financial position of the person you signed surety for. If their financial position has change for the better you can ask the bank to remove you as the guarantor/suretor.