Can a Guarantor Loan Help To Repair a Credit Rating?
Are you looking to buy your first home? There are many reasons why people seek out loans with a guarantor, and home loans are one of those reasons. Even people that might not need a guarantor are opting to go that route in favour of a better interest rate. In fact, did you know that there is even a bigger reason why you might want to get a guarantor for your loan?
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What Size Loan Are You Looking For?
Do you plan on financing the entire purchase price of your home? A down payment always helps, but if you’re looking to finance up to 110 percent of your home as an UK resident, guess what. You guessed it, you’re going to need a co-signer or loan guarantor.
Why not get a co-signer when you’re able to take advantage of a much better rate and need less money to close on a home? As you can imagine, guarantor loans are helping first-time home buyers in a big way.
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Keeping Interest Rates Low
Without needing a sizable down payment, and with a better interest rate, people are deciding to buy homes earlier. Plus, more people are buying homes in general. This is the example in UK anyway. Did you know that with a guarantor loan, you’re also not going to have to pay mortgage insurance premiums? As you can see, there are all kinds of benefits to getting a guarantor for your home loan.
All of that sounds great, but how many people are going to be willing to be a co-signer for someone on a home loan? Well, you might be surprised because remember this is a growing trend. As more and more people get used to the benefits of these loans, more of them are going to be searching out a guarantor. Naturally, not everyone can be a guarantor, or no one would need one, right?
Exploring Alternative Options
It also helps to know how all of this is working out culturally in UK. For example, who would you turn to as a guarantor for your home loan? Would you ask your parents? I bring this up because that is the most common option. Parents are picking up the responsibility of being a guarantor on home loans so that their sons and daughters an buy homes much more quickly.
Why is there this sudden desire for people to buy homes earlier? Well, let’s just say that desire has always been there, but the market was a bit different. Loan guarantors are just much more commonly used these days, which provides buyers that resource to call on to help them move forward with making the decision to buy a home.
Now just because you can finance up to 110 percent of a home doesn’t mean that you don’t need any money for the buying process. You’re exempt from that large down payment, but you’re still going to need a few grand at least. If you’re a young person just starting out or a parent watching your child move out, consider whether or not a guaranteed loan is a good option.
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