When guarantor loans were first introduced to the UK the rule was that your guarantor had to be a homeowner and if they weren’t you would be shown the door that was the harsh reality but times have changed. Guarantor loan industry has changed because of the difficulty in the current climate to buy home making it increasing tougher to find friends or family who are homeowners. Now there are a range of guarantor loan lenders that offer non-homeowner guarantor loans and welcome tenants to be your guarantor.
Borrowing With a Tenant Guarantor
The only drawback to your guarantor being a tenant is that it may restrict you to how much you want borrow as lenders feel comfortable lending more if you guarantor is a homeowner. Even if you guarantor is a tenant you can still borrow a significant amount so please check each direct guarantor lenders individual page and click through to get more details about how much can be borrowed.
Tenant guarantor loans are available UK residents and the age of your guarantor may vary between lenders but they must have a good credit history as this will be checked. The tenant guarantor must have credible income from employment in the event you are unable to pay and must be happy to sign any agreements which involve yourself and the lender.
Why do Guarantor Lenders used to only lend to Homeowners?
The thought process for lenders behind this is that Homeowners are seen as a less of a risk as they are seen as a good lending prospect, as a Homeowner they would have had to demonstrate to mortgage company that they have a good credit history. A guarantor who is a homeowner is also more likely to cover cost of any payments that the borrower doesn’t make. In unlikely situations the homeowner can always sell their property if they are desperate to rise the required funds or even remortgage. When deciding on who to ask to be your guarantor we would suggest that your guarantor is a homeowner as this would improve you chances of being accepted.