Compare non-homeowner or tenant guarantor loans

With a non-homeowner or tenant guarantor loan, you could borrow money by applying with a guarantor who does not own a house.

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If poor or limited credit history is preventing you from obtaining a personal loan, you could consider a non-homeowner or tenant 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 these products, the term “non-homeowner” refers to the residential status of the guarantor, not the applicant.

Non-homeowner or tenant guarantor loans usually have a higher interest rate than regular personal loans and homeowner guarantor loans because of the perceived increased risk to the lender and the complication of involving a guarantor. If the guarantor that you have in mind does own their home, then you could be eligible to apply for a homeowner guarantor loan (you don’t need to be a homeowner yourself, but you must be able to afford the loan).

What is a guarantor loan?

If you have a poor credit rating, banks could be reluctant to lend you money through a traditional personal loan. A guarantor loan is a personal loan that is guaranteed by a friend or relative – known as a guarantor. That means they promise 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 non-homeowner or tenant guarantor loan?

A non-homeowner or tenant guarantor loan does not require the guarantor to be a homeowner (a person who owns their home outright or has a mortgage). Lenders look at your guarantor’s credit history, income and outgoings rather than any equity they hold in property. As long as they have a good credit history and can afford the loan, it doesn’t matter if they’re renting.

Non-homeowner or tenant guarantor loan rates won’t be as good as homeowner guarantor loans. The actual rate of interest charged will depend on a range of factors, such as the loan amount, the duration and the financial circumstances of both the borrower and the guarantor.

Compare guarantor loans

Comparison ordered by total payable.
Name Product Total Payable Monthly Repayment Representative APR
Representative example: Borrow £6,000.00 over 3 years at a rate of 47.9% p.a. (fixed). Representative APR 47.9% and total payable £10,364.04 in monthly repayments of £287.89.
Representative example: Borrow £10,000.00 over 3 years at a rate of 41.2% p.a. (fixed). Representative APR 49.9% and total payable £17,566.20 in monthly repayments of £487.95.

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Why take out a non-homeowner guarantor loan?

If you’re planning a big purchase or want to pay off an existing debt, you may have considered obtaining a personal loan. However, if your poor credit history is preventing you from getting a loan with a traditional lender, then a non-homeowner guarantor loan could be an option.

The “non-homeowner or tenant” part of the loan refers to the guarantor’s property status – not the borrower’s. If your guarantor is a tenant, renting or even living with their parents, but has a good credit rating, they could still be eligible to be your guarantor and could help you obtain a loan.

Asking a friend, family member or work colleague to be a guarantor is a serious commitment for both parties and could impact your credit record or financial situation as well as your guarantor’s if you default on your repayments.

Compare homeowner guarantor loans

What should I look for in a non-homeowner guarantor loan?

When it comes to comparing non-homeowner or tenant 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 minimum eligibility requirements.
  • Can I borrow the amount I need? Will you be able to take out 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 non-homeowner guarantor loan

To secure a non-homeowner guarantor loan, there are a number of criteria you and your guarantor will need to meet. These will vary from lender to lender but will typically include some or all of the following.

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.
  • 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?

The application process

Make sure to do your research and compare loans before applying, making 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 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, though it can take longer due to the number of steps involved.

What documents do you need to open a personal loan?

Pros and cons of non-homeowner guarantor loans

Pros

  • Overcome bad credit.
  • Generally no fees.
  • Available with guarantors who don’t own property (eg renting, council tenants or those living with parents).

Cons

  • Need to find a guarantor with good credit.
  • Rates are typically higher than homeowner guarantor loans.

Frequently asked questions

We exist to help you find better. The offers we've compared on this page are from a range of products whose details we can track; we don't cover every product on the market...yet. Unless we've indicated otherwise, products are shown in no particular order or ranking. The terms "best", "top", "cheap" (and variations of these) aren't product ratings, although we always explain what's great about a product when we highlight it; this is subject to our terms of use. When you make major financial decisions, it's wise to consider getting independent financial advice. Always consider your own financial circumstances when you compare products so you get what's right for you.

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