The housing preferences of UK residents have changed in the past years. Today, renting has become a trend and taking a loan using a home as security is not possible anymore. However, people that do not own the house where they live can apply for a tenant loan.
A tenant loan is a personal loan that does not require an asset to serve as collateral. Because you do not own a home, which you can use to secure a loan or home equity if you are a house owner, lending companies offer tenant loans. Qualifying for the loan is easy. Lenders would assess your capacity to pay based on other factors such as your income, credit history, and credit score. However, lenders prefer to consider your ability to pay your loan, regardless of your credit score.
To qualify for a tenant loan, you must be renting a property with your friends, renting a room in a family-owned house, or renting a property with people you do not know and who are not related to you. Aside from extending a loan to people who do not own property, here are other benefits of a tenant loan.
You Can Use Funds from the Loan for Any Purpose
Some lending companies would ask people applying for a loan the reason why they want to take a loan. Nevertheless, when you apply for a tenant loan, the application form does not ask you to provide the purpose of the loan or your reason for taking the loan. You are free to use the funds that you borrowed for whatever purpose you want. You can use it to have your dream vacation, buy gadgets, go shopping, or to pay bills, and cover your expenses. You do not need to be facing an emergency in a tight situation to apply for a tenant loan.
You Can Decide How and When to Pay
Payment for tenant loan is highly flexible. You can pay your loan between one to ten years, depending on what suits your circumstances best. If the monthly amortisation is affordable, you can shorten the repayment period. Nevertheless, if you have borrowed a significant amount, you can repay it for several years.
You Can Borrow Up to £25,000
With a tenant loan, the minimum amount that you can borrow is £1,000 while the maximum is £25,000. Always consider the amount you need and your capacity to pay. Borrowing £25,000 would mean paying back the sum with interest for many years. If you borrow less than what you need, you might find it necessary to take a loan from other lenders. Having multiple debts is not suitable for your finances. Always think first before you decide on how much you will borrow.
Your Credit Score Is Not the Only Basis to Qualify for Tenant Loan
Many lenders are strict when it comes to the credit score of a loan applicant. People with bad credit would have a minimal chance of acceptance and approval. Although the tenant loan lenders might make a soft check on your credit history, they prefer to base their decision on your capacity to pay. They are more concerned with whether or not you have a regular job and a stable income. Once they think that you can afford to pay back your loan, they will approve your loan application.
Requires Few Documents
Lending companies that offer tenant loans require few documents. All you need to submit are your latest payslip, employment certificate from your employer, and proof that you are a tenant. Once you have submitted all, you are more likely to get a loan.