My friend wants to take a mortgage loan under my name. What should I do?

It is not legal if you take a mortgage loan for your friend under your name. First and foremost reason why you must refrain from buying a mortgage loan in your name for somebody else is because it is illegal. 

When you avail a mortgage loan in your name, then it becomes your responsibility that you will calculate loan emi and pay it on time. In case your friend is unable to pay back the EMI on time then it is you whose credit score takes a hit. 

It becomes even more dangerous if your friend is unable to repay the loan back in time for his failure to do so means that ultimately you will have to pay the loan amount out of your own pocket, and if you don’t then either the car gets impounded or the lender goes for some other items of yours as a collateral to recover the loan amount. 

There are loan schemes where there is an option of a co-applicant taking the mantle of ensuring that the loan amount is paid on time. It is understandable that you will have your own financial dreams to achieve and hence being a co-applicant to your friend may not be the most feasible option for you. I the end it also becomes your responsibility to ensure the loan amount is paid back and, in the process, your own financial requirements may take a hit. 

It is good to help your friends out but not at the expense where you suffer financially. Before you decide to avail a mortgage loan in your name or decide to become one of the co-applicants, do look at the fact that whether your friend will be capable of repaying the loan on time. 

It also goes without saying that in case you are not able to repay the loan on time, your relationship with your friend will suffer. However, as a friend he/she will understand the logic behind the decision taken by you. In short, regardless of anything, do not avail a mortgage loan in your friend’s name.

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