Top Reasons to consider taking out a Guarantor Loan

A guarantor loan can be incredibly beneficial for many people, and it’s important that you take the time to see what it can possible offer you. The more you learn about these loans, the better of a decision you will be able to make. If you need some extra money for an important expense, this type of loan might just be exactly what you need.

What is a Guarantor Loan?

First of all, a guarantor loan is basically just an unsecured loan that requires a person or “guarantor” who agrees to take over the payments if the primary borrower is unable to at any point and for any reason. These days more and more people are taking out these loans because of how incredibly helpful they can be.

They are available to people with bad credit

One of the most attractive things about guarantor loans is the fact that they are available to those with bad credit. As long as the person who you choose as your guarantor has good credit, you will have nothing to worry about. If you have had difficulty with getting approved for loans in the past because of your credit, you will definitely want to look into this option because of everything it has to offer.

There’s no borrowing limit

Another thing to consider about guarantor loans is the fact that there is no limitation to borrowing. As long as you have a guarantor with good credit, you won’t have to worry about being limited when it comes to the amount of money you will be able to borrow. You will almost certainly be able to borrow a large amount of money if your guarantor is a home owner. This can be incredibly beneficial if you require a large amount of funds for some sort of big project. The better your guarantor is in terms of their credit, income and assets, the more you will be able to borrow.

The Process is Fast

You will discover that the whole process for guarantor loans is very quick, so you should be able to get the money you need fast if you are approved. The approval process itself is also very quick, meaning that you won’t have to worry about waiting a long time to find out whether or not your application has been approved.

Flexibility

Guarantor loans are definitely known for being flexible, as the amount you borrow and the amount you can repay ultimately determine the terms of repayment. This is why not many people have difficulty paying off their guarantor loans at all. A lot of people are afraid to get certain types of loans because they are afraid they might not be able to pay them back, but with guarantor loans it isn’t such a big deal.

Fewer Problems

There are far fewer problems with guarantor loans than other kinds, so you will need to keep that in mind as well. Statistics collected by Citizens Advice revealed that five hundred problems were received from guarantor loans between 2012 and 2015, compared to the 29,000 problems that came from other types of loans. This means that you won’t have to worry about facing the same kinds of difficulties and issues that you might with other loan products.

A Safety Net

Guarantor loans can act as a safety net for those who are unable to pay back the loan they take out, because the person who acts as the guarantor will be responsible for paying it. This means that you won’t have to go deep into debt yourself if you are unable to pay back your loan for whatever reason.

Conclusion

The fact is that guarantor loans are a great option to consider, especially for those who are in a tight financial situation and need assistance. There are many different types of loans that you can take out, but not all of them will be able to provide you with the same great terms and benefits. If you are currently looking to get a loan, you will definitely want to make a point of seeing what guarantor loans have to offer. In the end you will be glad you decided to do this research.

Important Rules to follow when getting a Home Loan

There are certain important rules that you will need to follow when it comes to getting a home loan. This type of loan can help you out a lot when it comes to getting the money you need to buy your new home, but you don’t want to rush into it. The more you learn about home loans, the better off you are going to be overall.

Never borrow more than you can realistically repay

You never want to borrow more than you think you can pay back on time. While it’s true that the lender you apply to is going to look over all of your financial details, including your income, you will still need to do the math yourself as well. Those who take out more than they can borrow usually end up defaulting on the loan, which is the last thing you want.

You could end up in a nightmarish situation if you cannot pay back your home loan, which is all the more reason for you to be sure that you can pay it back without any issues. Your credit will also take a serious hit if you don’t end up paying back your home loan on time.

Keep tenure as brief as possible

The maximum home loan tenure that is offered by most major lenders is around 30 years. The longer the tenure, the lower the EMI is going to be. This can make opting for a 25-30 year loan tempting, but it’s best to take the shortest tenure so you will be able to actually afford the loan. The interest outgo is going to be much higher if you select a longer tenure, so you will need to keep that in mind. The longer the tenure, the higher the compound interest your bank will earn from you.

Sometimes it is in fact necessary to select a longer tenure though. A young person who has a fairly low income probably won’t be able to borrow enough if the tenure is just 10 years long. Instead he will need to increase the tenure so that the EMI fits his budget. If your income is fairly high, you should definitely go with the shorter tenure because of how much money you’ll save on interest over the years.

Submit prompt and regular repayments

It’s always a good idea to submit prompt and regular repayments for your home loan so that you don’t end up getting in trouble later on down the road. Most people who keep submitting late payments on their home loan at irregular intervals usually end up defaulting on their loan at some point. It is particularly important to do this with home loans, because the last thing you want is to lose your home. Prioritize your finances so that your mortgage always comes first, because it is the most important.

Don’t borrow money just to splurge

You should always avoid borrowing money from others just so you can splurge or make investments. This is a common mistake that too many people make, and it could land you in big financial trouble in the not-too-distant future. Ultra-safe investments, such as fixed deposits and bonds, will not be able to match the rate of interest that you pay on your loan. While it may be tempting to do this, you must resist.

Take out Insurance

If you are planning on taking out a home loan, make sure that you take out insurance for it. You should buy a term plan on the same amount to ensure that your family aren’t stuck with a lot of debt if something happens to you. You never know what the future holds for you, which is why it’s such a good idea to take out insurance on your home loan.

Conclusion

The more information you get on home loans and tips to follow when getting one the better. You simply cannot be too careful when it comes to taking out a home loan, because it is probably the largest amount of money that you are ever going to borrow in your life. Those who do not bother to get this information typically regret it.

Frequently Asked Questions about Home Loans

There are so many things that you will need to know about home loans that you will definitely want to make a point of doing your research before reaching a final decision of any kind. Getting a mortgage is a very big deal, so you will therefore want to get all of your questions answered. Too many people rush into getting a home loan, and most of them end up regretting it deeply later on.

What documentation do I need to provide?

You will need to provide a number of different documents when getting a home loan, such as bank statements, car titles, employment records and more. It is important that you have all of the necessary documentation prepared so that you aren’t caught off guard at all. By getting organized you will be able to get through this process quickly.

Do I have to make a down payment?

While it is true that most people who buy a home make a down payment of some kind, you don’t necessarily have to. It is, however, recommended that you put down 10 to 20 percent of the total value of your home when getting this sort of loan. The more money you put down on your loan, the lower your interest rate is going to be. If you want to save as much money as possible on interest throughout the years, you will definitely want to think about making a sizeable down payment.

What is mortgage insurance and why is it required?

When you are going about buying a home, it is important that you purchase insurance. This insurance is required on programs where a down payment is not needed, though it is good to have regardless of whether or not you make a down payment. If you are unable to pay off your loan on time for whatever reason, this insurance policy can really help you out.

What is a balloon loan?

A ‘balloon loan’ is simply a short-term loan with payments amortized over a longer period of time. These payments are not adequate for paying off the loan in full for the pre-determined term. The remaining balance, which is called the balloon payment, is due in full upon the maturity of the note.

What is my interest rate going to be?

There are going to be a number of factors that will ultimately affect the interest rate on your home loan, including your credit. The better your credit is, the lower your interest rate is going to be. The amount that you put down on the loan is going to be another big factor in determining how much money you will end up spending on interest. It is highly recommended that you put down as much as possible on your home so that you are not stuck paying a very high interest rate for a long time.

Which lender should I choose?

You will need to make a point of taking the time to find the best possible lender to get the money for a home from, because there are quite a few of them. The more time you take to do this research, the better your chances are going to be of getting a great deal on a mortgage. The last thing you want to do is to rush into this sort of decision, because you will deeply regret it at some point. A good lender will be able to give you a good deal on the loan you need so that you don’t end up paying too much over the years.

Conclusion

When it comes to getting a home loan, there are actually quite a few things that you will need to keep in mind. Anyone who wants to buy a home will need to make sure that they do the necessary research. There are a lot of things to consider when getting a mortgage, including the lender you are going to choose and the type of interest rate (fixed or adjustable). As long as you make a point of educating yourself on your options, you should be able to get the money you need to buy your dream house without any issues.