Question

A young couple wishes to take out a sizeable home loan and, at the insistence of the bank, your client, asks the husband's elderly Chinese parents to guarantee the loan. The parents have very limited spoken and written English. Under what circumstances would you advise your client, the bank, that they could successfully rely on this guarantee should the young couple default on their loan?

Answer 1

Well I would suggest my client, i.e. bank that, before giving any approval to the young couple for home loan on which Chinese parents are going to guarantee the loan amount, following points should be considered:

1. Background history of young couple as well as parents should be verified in detail.

2. Source of income of couple should be verified from which they will pay off the loan amount.

3. A person from the bank should personally visit the couple’s property to verify whether they are genuine

4. Personal meeting should be done with the Chinese parents and the entire loan details should be explained to them in their known language, before signing the document.

5. Bank should verify that parents who are willing to guarantee the loan have such amount of money, that can be used by the bank in case of any default.

6. After considering all the above said points , bank may issue home loan to the young couple only if they have receive all the documents signed by each party with all kind of terms and conditions.