It's a question many people don't think to ask, but it's crucial to understand the answer. A bank guarantee is essentially a promise from the bank to provide you with the funds needed to purchase a property.
However, the bank's commitment to give you the money happens at the end of the transfer process, even though they signed the guarantee at the beginning. This means that although they promise the funds early on, they only release them much later.
Now, here's the critical part: the bank can retract the guarantee if your financial situation changes significantly before they release the funds. This is why understanding this process is vital to avoid any last-minute surprises.
Early on, the bank assesses your creditworthiness and decides that you're eligible for the loan. But if, between receiving the guarantee and the actual transfer of funds, you change your financial behaviour your credit profile will change.
Before releasing the funds, the bank will re-evaluate your credit status. If they find that your credit position has worsened, they can retract the guarantee, leaving you without the funds to complete your property purchase.
So, what can you do to prevent this from happening?
Once you've received the bank's guarantee, it's crucial to maintain or improve your financial status until the property transfer is complete and the funds are released. Avoid taking on new loans, don't make large purchases on credit, and keep your spending in check.
Ensuring your financial position remains stable will help secure the funds and ensure that everything goes according to plan.
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Gal Ezra
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