Struggling to get a loan and don’t own your own home? Guarantor loans for non-homeowners could warrant further exploration. With the backing of a guarantor, you could be able to borrow up to £10,000. But is a guarantor loan the answer to your bleak borrowing outlook or would your time be better spent by heading down another route? Let’s look at the highs, lows and need-to-knows of non-homeowner guarantor loans.
Can I get a guarantor loan as a non-homeowner?
You don’t need to be a homeowner to get a guarantor loan. For those with a poor credit rating, borrowing against an asset such as a house or car is a common way to increase the likelihood of being accepted for a loan. With a guarantor loan you don’t need to offer up an asset as security. Instead, you ask someone who knows you well to back your borrowing. If you fail to stick to your repayment schedule, and miss payments, your guarantor will be asked to make those payments instead.
Does a guarantor have to be a homeowner?
A guarantor doesn’t have to be a home-owner – a good thing, as home ownership is at its lowest level for 30 years. Lenders may prefer guarantors to be homeowners since they’re generally seen as a financially stable bunch, but it’s not a prerequisite. So, if both you and your guarantor are renting, this could still be an option for you. They will need to fulfil the lender’s criteria to be accepted though.
Is a guarantor loan suitable for me?
Guarantor loans aren’t suitable for everyone, so if you’re unsure whether this type of borrowing is for you, take plenty of time to research how they work before you and your guarantor commit. If you’ve been guilty of borrowing irresponsibly in the past, lenders may be unwilling to take a risk on you without the reassurance of a guarantor or secured lending, particularly if you have a CCJ.
Here’s the sensible reminder bit. You should always think hard about whether borrowing is in your best financial interests. It’s important to only borrow what you know you can comfortably afford to pay back, particularly when your guarantor’s credit rating is at risk as well as your own. If you’re already struggling to manage existing debts, reaching out to an organisation that offers free debt advice, such as the government’s Money Advice Service could provide you with helpful advice.
If you’re ready to get on board with a guarantor loan, with just a few clicks, our moneymatcher returns a number of lenders interested in your application based on your requirements. We make it easy for you to compare and contrast the important points like interest rates and the total cost of borrowing, so you can seek out the best deal for you.