In today’s society there has been a marked increase in the number of people renting homes. This is for a number of reasons, but it also means that more people are non-homeowners. Historically lenders preferred to lend money to those with collateral, such as a house, in a secured loan.
Non-homeowner loans were introduced to help people that don’t own a home, or have bad credit, to be able to receive a loan when they need it. Tenants, or those living with family, can still apply for a loan or act as a guarantor, depending on their situation.
Tenant guarantor loans apply to those who aren’t a homeowner, such as those renting or living at home. They can sometimes be more difficult to secure compared to homeowner loans as applicants don’t have assumed financial responsibility. Non-homeowner loans are unsecured loans, for more information on unsecured vs secured loans, check out our guide.
Tenants can be included as the borrower or as a guarantor for someone else when applying for a non-homeowner guarantor loan. They can often be used for education, a car, home improvement or debt consolidation.
Tenant loans, due to the options on offer, can range in APR and interest rates, so it is best to research before applying. Consider your financial position and ability to repay the loan each month.
If you are considering applying for a guarantor loan, or becoming a guarantor for someone else’s loan, you’ll need to understand how being a tenant can affect you.
A non-homeowner guarantor loan is specifically designed to allow tenants, and those living at home, to have access to a loan or offer themselves as a guarantor. While this is the case, you’ll still need to meet the other criteria for being a guarantor, so it’s worth double checking who can be a guarantor.
A non-homeowner loan is often referred to as a tenant loan. It’s the same form of loan, but just a different name for it. The same can be said for tenant guarantor loans, which is just another name for non-homeowner guarantor loans.
A non-homeowner loan is a good option for those with bad credit looking to take out a loan. These loans are advantageous as they allow people with a poor credit score to borrow money where some mainstream lenders won’t.
Guarantor loans in particular are a good option for those with bad credit. Having a guarantor reassures lenders that payments will be met, meaning they are more likely to approve them, and successfully repaying a guarantor loan can help improve your credit history.
A bad credit guarantor loan generally falls into the non-homeowner loan category, ensuring that you don’t need to be a homeowner to take out a loan. This means that the loans are unsecured. For more information on unsecured loans and also loans for bad credit, see our guides.
While non-homeowner loans are designed to make it easier to access a loan when you need it, there are still a number of criteria that both a borrower and a guarantor must meet. They’ll still need to be a resident of the UK, be over 18, hold a UK bank account and receive a regular monthly income.
Check who can be a guarantor if you’re unsure about what other criteria they’ll need to meet.
A tenant guarantor loan, much like a standard loan, can apply to you in various scenarios and situations. For the majority of applicants renting or living at home, you are a tenant loan applicant. Other loan options apply if you are a financial guarantor for someone else.
The criteria for borrowing money varies from lender to lender. An easy way of seeing how your application could be viewed is through a credit check.
If you are a tenant, there are some instances when this type of loan will apply, depending on what you are using the funds for. Examples include:
Another situation where non-homeowner loans will apply to you is if you are acting as a guarantor for a family member, friend or colleague. Some lenders allow tenants to act as a guarantor – a financial partner – on a borrower’s loan.
In this situation, you would agree to make any monthly repayments if the borrower is unable to do so. This would require you to be financially secure and trusting of the borrower to meet the payments. Check our guide for a full breakdown of how being a guarantor works.
You will likely be subject to a credit check if you are interested in becoming a guarantor.
Much like a homeowner, most loan options are available to you as a tenant, though it is important to consider affordability.
The options that may be available to you include guarantor loans, personal loans, payday loans and secured loans. Of those, a personal loan may be most difficult to get approval for. Many are dependent on good credit or home ownership.
Payday loans provide a short-term finance option, making them popular among borrowers. However, these loans can come with a very high APR. That could lead to large monthly repayments.
Secured loans demand an asset, such as a car, to be used as collateral for finance to be granted. However, failure to make your monthly payments will lead to losing your asset.
Guarantor loans are popular among applicants with poor credit. They require a financial partner to meet any repayments you can’t. It is a form of a loan based on your relationships. A non-homeowner guarantor loan is a good option for those with poor credit.
It is essential to apply for loans that you’re expected to be approved for. Most applications with high street banks, in particular, record a hard search on your credit history which could lower your rating.
If you want to find out more about what non-homeowner or tenant guarantor loans you are eligible for, try comparing guarantor loans using our tool.