Compare homeowner guarantor loans

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

Compare guarantor loans

Table: sorted by representative APR, promoted deals first
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Name Product Total Payable Monthly Repayment Representative APR Link
UK Credit Limited Unsecured Homeowner Loan
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Representative example: Borrow £15,000.00 over 3 years at a rate of 26.9% p.a. (fixed). Representative APR 26.9% and total payable £21,202.92 in monthly repayments of £588.97.
If you’re finding it difficult to obtain a personal loan because of your credit history, it may be worth considering a homeowner guarantor loan. A guarantor is a friend or relative who is willing and financially able to back you, and who promises to repay the loan in the event that you cannot.

With this type of loan, it doesn’t matter whether you (the borrower) are a homeowner, but it does require your guarantor to own their own home or to have a mortgage.

These types of loans usually charge a higher interest rate than traditional personal loans because of the perceived increased risk to the lender and the complications of adding a guarantor.

What is a guarantor loan?

People with a poor credit rating often struggle to obtain traditional personal loans. A guarantor loan is a personal loan that is guaranteed by a friend or relative – known as a guarantor – who will usually have a better credit rating and who promises to honour any debt if you, the borrower, default on your payments.

If the borrower can’t pay the loan, then the guarantor will need to take over the repayments until the loan is paid off.

What is a homeowner guarantor loan?

With a homeowner guarantor loan, a borrower with poor or limited credit can obtain a loan by applying with a friend or relative who owns property and promises to step in if the borrower is unable to repay the loan.

A homeowner guarantor loan requires the guarantor to own their home outright or have a mortgage. The loan is not usually “secured” on the property, but as a homeowner, the guarantor is generally considered by the lender to be a safer prospect.

The interest rate charged will depend on a range of factors, such as the loan amount, the duration and the borrower’s and guarantor’s financial circumstances (including the amount of equity in the property). It is likely to be higher than a mainstream personal loan but lower than a guarantor loan where the guarantor does not own a property.

Late repayments can cause you serious money problems. See our debt help guides.

Why take out a homeowner guarantor loan?

If you’re planning a big expense or looking to consolidate an existing debt, you may want to take out a personal loan. However, if your credit score is preventing you from accessing most traditional personal loans, then a homeowner guarantor loan could be an option.

The “homeowner” part of the guarantor loan refers to your guarantor’s property status, not yours as the borrower. To be eligible for such a loan, your guarantor must either own their home outright or have a mortgage. Ideally, they shouldn’t be a first-time buyer with only a short period on their mortgage.

Asking a friend, family member or work colleague to be a guarantor is a big commitment, which could have an impact on their credit history or financial situation if you default on your repayments.
Compare non-homeowner guarantor loans

What should I look for in a homeowner guarantor loan?

When it comes to comparing homeowner guarantor loans, there are some key features to look for. Ask yourself these questions before deciding on a loan.

  • Do we qualify for this loan? Don’t waste time applying for a loan if you and your guarantor don’t meet the requirements.
  • Can I borrow the amount I need? Will you be able to borrow the amount you need, and will you be able to pay it back in a reasonable amount of time? If not, you might want to look elsewhere.
  • Does it have a competitive interest rate? Most guarantor loans charge a fixed rate of interest, meaning your monthly repayments will stay the same throughout the loan. Remember that the advertised rate is not necessarily the rate that the lender will offer you. Lenders will look at factors such as the credit score and income for both you and your guarantor as well as your (the borrower’s) expenditure when deciding what rate to offer you.
  • Can I make overpayments or repay the loan early? Most lenders will not penalise you for paying back some or all of the loan early. However, that does not necessarily mean that doing so will save you money in interest. In many cases, you will need to pay one or even two months of interest to settle your loan early.
  • How long will I have to pay it back? Aim for a loan term that gives you monthly repayments you can afford without being too long. Otherwise, you could wind up paying a lot in interest in the long run.
  • Are there any fees? Most lenders don’t charge fees on guarantor loans, but it’s always good to check.

Applying for a homeowner guarantor loan

To secure a homeowner guarantor loan, there are a number of criteria you will need to meet. If you are a homeowner yourself, have you checked whether a guarantor loan is really your best option? Have you considered remortgaging instead?

Criteria for the borrower

  • Aged between 18 and 75.
  • Either working full-time, part-time or for an agency; self-employed or a pensioner.
  • UK resident.
  • Holds a UK bank account.
  • Able to afford the loan.

Criteria for the guarantor

  • Aged between 18 and 75 (although some lenders have a minimum age of 21).
  • UK resident.
  • Has a good to excellent credit rating.
  • Owns a residential property outright or has a mortgage on one.
  • Can afford the payments if the borrower can’t.
  • Not the partner or spouse of the borrower.
  • Comfortable to act as guarantor and understands the commitment they are undertaking.

Thinking about becoming a guarantor?

If a friend, relative or work colleague has asked you to be a guarantor, there are some things you must consider before applying.

  • Do you trust them to make all the payments on time each month?
  • Are you sure the borrower can afford it?
  • Are you comfortable taking over the payments if something goes wrong?
  • Does the borrower really need the loan? Couldn’t they just save up instead?
  • Are you planning any big financial commitments during the duration of the loan? Being a guarantor could affect how much credit you are offered elsewhere.

The application process

Make sure to do your research and compare loans before applying, and make sure both you and your guarantor meet the eligibility criteria. The application process usually goes as follows:

  1. Borrower fills in details and signs agreement.
  2. Guarantor fills in details.
  3. Lender checks both the guarantor’s and the applicant’s credit score and ability to pay off the loan.
  4. Guarantor signs agreement.
  5. Lender may contact the borrower, guarantor or both over the phone to discuss affordability.
  6. Lender officially offers the loan once the lender is satisfied with both parties.
  7. Borrower accepts the loan offer.
  8. Lender issues the funds to the guarantor, who can then transfer the amount to the borrower.

Many lenders aim to complete and approve an application within 48 hours.

What documents do you need to open a personal loan?

Pros and cons of homeowner guarantor loans


  • Better interest rates.
  • Larger loan periods.
  • Longer terms.
  • Overcome bad credit.
  • More likely to be accepted than a non-homeowner/tenant.
  • Generally no fees.
  • Unsecured so the guarantor’s home is not at risk.


  • Need to find a guarantor with good credit and a home.
  • Rates still higher than traditional personal loans.
  • Rates/approval likely to depend on amount of equity in the property.

Frequently asked questions

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