Compare Homeowner Guarantor Loans

What is a homeowner guarantor loan?

With a homeowner guarantor loan, you could borrow money by applying to a lender with a guarantor who owns property.

This is especially useful for people finding it hard to secure a loan, perhaps because of a bad credit, or a lack of credit history.

What is a UK homeowner guarantor?

A guarantor is someone, usually a trusted loved one such as a member of your family or a close friend, who is willing to financially back your loan and promises to pay the debt if you cannot.

In the case of UK homeowner guarantor loans, the guarantor must own property.

How do homeowner guarantor loans differ from other guarantor loans?

While some guarantor loans allow both the borrower and guarantor to be tenants, homeowner guarantor loans require the guarantor to own property.

Due to the added security of the guarantor being a homeowner, you may be able to borrow more at a lower rate than non-homeowner guarantor loans.

» COMPARE: Guarantor loans

Does a guarantor have to be a homeowner?

For a homeowner guarantor loan, the guarantor must own property.

However, other forms of guarantor loans are available that allow the borrower to apply with a guarantor who is a tenant.

How does a homeowner guarantor loan work?

In many ways, a homeowner guarantor loan works just like any other loan. You borrow money from a lender and then pay that money back, with interest, over a set period of time.

The one major difference is that this loan requires a guarantor because it is available to people with bad or limited credit histories.

What further distinguishes a homeowner guarantor loan from other guarantor loans is the need for the guarantor to own property.

If you, as the borrower, were unable to make your loan repayments, the guarantor is legally required to make the payments in your place.

For the loan application to be approved, the guarantor would need to pass affordability and credit checks to prove they are in position to pay back the debt in full if needed.

This is why it is so important to carefully consider who you ask to be your guarantor and, as a prospective guarantor, whether to say yes.

» MORE: What to consider before becoming a guarantor

Does having a homeowner guarantor help get a loan?

Having a homeowner guarantor will improve the chances of your guarantor loan being approved.

This is because lenders view homeowners as a safer prospect than those without the ability to use property as security.

If you are unable to find a guarantor who owns property, however, there are lenders who offer non-homeowner guarantor loans.

» COMPARE: Non-homeowner guarantor loans

How much can I borrow with a homeowner guarantor loan?

Normally, homeowner guarantor loans range between £1,000 and £10,000.

However, some lenders may allow you to borrow as little as £500, while others may allow you to borrow more than £10,000.

Pros and cons of a homeowner guarantor loan

You should always think carefully before taking out a loan. This is particularly true of a homeowner guarantor loan, as it involves bringing a third party on board as your guarantor.

Below we take a look at the pros and cons of applying for a homeowner guarantor loan.

Benefits of a homeowner guarantor loan

• As a borrower, you can access funds despite a less than perfect credit situation.
• The interest rates on homeowner guarantor loans can be lower than both standard guarantor loans and other bad credit loans such as payday loans.
• If you keep on top of your repayments and show you are a trusted borrower, you can improve your credit score.
• You can pay the full loan off at any time, but you may be subject to an early repayment charge.

Risks of a homeowner guarantor loan

• Although interest rates can be lower than payday loans and standard guarantor loans, they are usually higher than personal loans.
• Even if your guarantor’s personal circumstances change, they will be liable for the loan if you, as the borrower, are unable to make the repayments.
• If you or your guarantor is unable to make the repayments, it could negatively impact their credit score.
• If your guarantor has to step in and make the repayments, it could put a strain on your relationship.

How to apply for a homeowner guarantor loan

When applying for a homeowner guarantor loan, you will need to have a UK address and bank account.

The application process starts by you selecting the loan amount and term, and submitting your personal details and the name of your property-owning guarantor.

Both the borrower and guarantor will then go through affordability checks, taking into consideration regular income and all outgoings, such as rent or mortgage payments, household bills and living costs. This process may take place over the phone.

You will both also be subject to a credit check. Some lenders do this via a soft check which does not leave a mark on your credit file, whilst others will do this via a full credit search so check this before you proceed.

Once the application has been submitted, homeowner guarantor loans can be approved in less than 24 hours, often with a payout on the same day.

Alternatives to homeowner guarantor loans

There are a number of alternatives to homeowner guarantor loans, including non-homeowner guarantor loans.

If you can’t find an appropriate guarantor for either form of guarantor loan, then you could look into a bad credit loan that doesn’t require a guarantor.

» COMPARE: No guarantor bad credit loans

There are other bad credit loans available, including secured bad credit loans where you can use your own property as a security against the loan.

» COMPARE: Secured bad credit loans

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