Many people with less than perfect credit histories believe that they can only get a loan from a bank or building a society if they’re a homeowner. Many homeowners with bad credit believe that they can only get a loan from a bank or building a society if they find a guarantor who will pay a loan off if they can’t.
What is the actual truth? In this article, we look at homeowner loans, guarantors, and the types of loans you can apply for right now.
A homeowner loan is a type of loan a person can take out if:
• they own the property they live in (a flat, a house, or a bungalow) which has “equity” in it and which may or may not have a current mortgage on it, and
• they agree that, if they’re unable to keep up repayments on their secured loan, that the finance company may attempt to repossess their home. The reason they would want to repossess your home is that they would then sell it and use the proceeds from the sale to settle the outstanding balance on your secured loan.
Homeowner loans offer three distinct advantages over loans where you don’t have to use your home as security. They are:
• you can borrow far more with a homeowner loan than an unsecured loan. Here at Loan Princess, we help people find lenders willing to borrow them between £500 and £35,000.
• the interest rate is generally much lower on a homeowner loan than with an unsecured loan
• you can borrow money over a much longer period – up to 25 years. With unsecured loans, the term of the loan tends to be no longer than 7 years.
Homeowner loans without a guarantor
The reason why finance companies are happier to lend more money on a homeowner loan over a longer period is that, because you have put up your property as “security”, it offers them more certainty. That certainty comes from the fact that, if you do hit a period of financial difficulty and default on the loan, they can use the proceeds from the sale of your home to pay them off in full.
And it’s because of this certainty that you’ll never be asked to provide a guarantor if you want to take out a homeowner loan.
Unsecured loans, on the other hand, don’t require you to put up your home as security to be able to borrow money. But because there’s no security, a lender is much less likely to get their money back if you can’t pay your loan off in full. It’s riskier for them so they charge higher interest rates to offset that risk as much as they can.
Whether you’re a homeowner or a tenant, you can apply for an “unsecured loan”.
Some homeowners and tenants who have poor credit will choose to go for a different type of loan called a “guarantor loan”. With a guarantor loan, someone promises to pay back your loan in full if you can’t pay it back yourself.
You can borrow more money over longer periods of time if you have bad credit with a guarantor loan than you can with an unsecured loan. However, although it’s not always the case, a secured loan is cheaper than a guarantor loan, you can borrow more money, and you can borrow over a longer period of time.
There are no homeowner loans on offer which require you to have a guarantor.
The FAQ about homeowner loans without a guarantor
So, if you’re thinking about applying for a homeowner loan, what are the most frequently asked questions our team here at Loan Princess receive from visitors to our website?
What are homeowner loans generally used for?
Homeowner loans are used for a variety of different purposes including:
• home improvements (including extensions and conservatories)
• debt consolidation (rolling up all your existing debts to take advantage of a cheaper interest rate on a homeowner loan)
• car purchase
Please note that homeowner loans can’t be used for business purposes.
How long will it be before I get my loan?
You will receive an indication on whether you’ve been accepted for a homeowner loan and the rate that you’re likely to pay within seconds of completing your application form.
Please make sure that you complete the application form in full using the very latest and most accurate information you have. It’s true across the entire loan sector that many initial applications are turned down because there are mistakes on the application form.
When you take out a homeowner loan, the lender will add a “charge” to your property which takes a few days. Most homeowner applications loans which have been accepted take up to two weeks before the money is transferred to your nominated account.
Are homeowner loans called by any other name?
Yes. If you see an advert for a “home equity loan”, “second mortgage”, or “second charge mortgage”, then it’s likely that the advert is for a homeowner loan.
If you own your property outright, you may see a homeowner loan referred to as a “first charge mortgage”.
Apply for a homeowner loan with no guarantor with Loan Princess
If you wish to apply for a homeowner loan, we invite you to apply via Loan Princess. Loan Princess is not a lender, we’re a broker. What that means is that we work with dozens of different homeowner loan companies to help borrowers find the right lenders and the right lenders find the right borrowers.
It all happens in seconds. Lenders are only interested in Loan Princess introducing them to borrowers who meet their “profile” so when we get your application, we match you to the lenders whose “profile” is closest to you and your life.
When we have found what the best offer is, we’ll show you everything you need to know about it including the interest rate and the monthly repayment. We’re not motivated by the commissions that we receive from lenders – our computer only presents you with the loan that’s best for you. If you’re happy to proceed after reading the terms and conditions, sign the online documentation and a new relationship will form between you and your lender.
Our service is free. You will never ever pay us a penny for our service. We’re fully licensed and authorised by the Financial Conduct Authority for your peace of mind.
To start your application for a homeowner loan, please click here.