If you’re not a homeowner and looking for a loan, it can be a tough time. Luckily for you, we’ve got everything you need to know about securing yourself a loan, without a home.
If you’ve ever tried applying for a loan, you’ll know how stressful it can be. The seemingly endless checks and questions can feel more like an interrogation then a financial lending service. When you’re in need of a loan, it can sometimes be difficult to secure yourself one. Many companies and lenders will rely on credit checks, and for most people, that means you won’t get the best rate on your loan. Not only that, but they may ask to see proof that you’re a homeowner in order to grant you a loan.
In this day and age, not everyone has the luxury of being able to afford a home. Since the ever-increasing rise of house prices, more and more younger people are finding it increasingly difficult to get on the property ladder. Securing a mortgage is nigh impossible without a huge deposit and a hefty salary to match with lenders’ high expectations. All of this means that more and more people can’t and won’t own a home – which means they’re struck off in the eyes of mortgage and some other typical lenders.
However, there are ways to secure yourself a loan, without having a home. In this post, we’ll be talking about non-homeowner guarantor loans, the smarter way of borrowing money without owning your own property. We’ll get into the full details of it all, below.
What is a non-homeowner guarantor loan?
A non-homeowner guarantor loan is ideal for those that are seeking a loan but don’t own a home (obviously), but also those with bad credit too. A guarantor loan does not rely on your credit score, at all. You won’t be submitted to credit checks or interrogated about your financial history, all you need to do is find yourself a guarantor.
You guarantor must meet certain criteria however. They must be between the ages of 18 – 78, a UK homeowner and have a regular income. This means that they’ll be able to sign and support your guarantor loan application. It allows you to apply for larger amounts of money, anywhere between £1,000 and £15,000. This is ideal for car financing, home restoration or even wedding loans.
Other Types of Non-Homeowner Loans
It’s worth mentioning there are other ways to secure yourself a loan when you’re not a homeowner. Yes, there’s the infamous payday loan that also doesn’t rely on your credit score. For those of you that don’t know about payday loans, they are a short term and possible high cost, lending option. Payday loans are typically for smaller amounts of money, between £100 – £1,000. The problem with payday loans, is there ever-growing interest rates – sometimes these APRs can be as high as 1000% and more.
It makes borrowing a small amount of money very expensive, in the long run. If these loans aren’t paid off ASAP, they can begin to total a lot of money. Whilst the draw of a fast pay-out and no credit check, the costs can cripple your finances if the loan isn’t paid off quickly. These loans are high risk and high cost. Whilst it may be an ideal non-homeowner loan for smaller amounts of money, be aware of the risks of using a payday loan.
Non-homeowner Guarantor Loan Interest Rates
Whilst payday loans have an extremely high APR, non-homeowner guarantor loans fall in the middle of the pile. Although bank and traditional high street lender loans are priced between 2% – 29% (dependent on the lender), a guarantor loan is around 39% – 69.9% (again, dependent on the loan provider). Guarantor loans have a higher interest rate than standard bank loans. Rates vary with how much you want to borrow and for how long too, but it is worth noting that it’s the best kind of loan rate you can receive if you have bad credit.
If your credit is score is good, you stand a better chance of receiving a better rate on a loan from traditional lenders. However, if you’re credit score is less than impressive, a non-homeowner guarantor loan is probably the fairest rate you’ll receive for a loan (if you have bad credit). Whilst the interest rates are higher than good credit rates from banks and other lenders, it’s a significantly lower amount than payday loan APRs, plus you can borrow more money too.
Secured and Unsecured
If you’re a non-homeowner and seeking a loan, you’ll probably only be able to land yourself an unsecure loan. This means that the loan is not secured against any of your property or possessions. Unlike secure loans (such as mortgages), which ask you to put up your home or belongings up as collateral against the loan – should you be unable to repay it, these items will be repossessed. That’s why, unsecure loans are typically for smaller amounts. Non-homeowner guarantor loans are a type of unsecure loan along with payday loans. Most homeowners looking to borrow large amounts of money can put their home up as collateral against the loan. However, those without a home can use unsecure loans. Whilst you won’t be able to borrow as much, a non-homeowner guarantor loan will allow you to borrower a significant amount of money.
How Guarantor Loans Work
When you decide that you’re going to apply for a non-homeowner guarantor loan, you’ll need to find yourself a lender and a guarantor. You guarantor needs to sign your application and agree that if you are unable to make repayments on the loan, they will cover the cost for you. This is standard procedure for guarantor loans, as there is no credit check. Companies need to know they’re getting their investment back, so, that’s why they ask your guarantor to agree to cover any costs. Your loan can be borrowed from anywhere between 1 – 5 years, and interest rates vary depending on the lender and loan term too.
Most lenders will approve your application once you and your guarantor have completed the necessary paper work. Some companies approve applications and send money within 24hours. Your money will go to your guarantor, and then they can transfer it to your account. So, you can begin using your loan very soon! The appeal of guarantor loans is you don’t need to have your own home or a good credit score, just someone who trusts you to sign your application with you. It’s trust-based lending for non-homeowners.
As non-homeowner guarantor loans are personal loans, it means they can be used for pretty much anything. It’s your money to use as you wish. Some choose to renovate their home, consolidate any outstanding debts or even as a wedding loan. It doesn’t matter what you use your loan for – as long as it’s legal!
Non-homeowner guarantor loans are ideal for those that want to borrow money but have no home to secure the loan with. It’s the ideal way of borrowing larger amounts of money at a fairer interest rate.