If you own your home,
you know you have the options of being able to remortgage as well as take out different unsecured and secured loans, but people who happen to be tenants or if you have to live with your relatives, don’t have nearly as many options it seems. In Britain, the population is made up of 30% of renters, and this recession is making that number go up drastically as people begin to default on their mortgages.
A solution for those people is the tenant loan,
an offer that was introduced so that people who did not have the collateral of a house to secure their loan could still have an unsecured means of getting the money they needed. Having residential status of any kind normally works when applying for a tenant loan, but it might change between providers. If you have bad debt or a bad credit history, though, you may still get accepted for this particular loan, as long as you can prove that you could repay.
The real downside for this particular loan is that,
just like any other loan that isn’t secured, the interest rate is going to be higher than average. For homeowners, they look at loans at around 7.8% interest on an unsecured loan, whereas the tenant loan could be looking at as high as 24%! The unsecured loan
has a lower limit for borrowing, so it makes it easier for people to borrow the smaller amounts even with poor credit, but it will make the rate higher.
As a tenant, though, the unfortunate reality is that many well-known banks will be unwilling to give you a competitive loan, since they would rather have the homeowners who are considered a lower financial risk. The best thing to do, then, is to make sure that you look around. Consider the interest rates of different tenant loans, including those who are online, many of which offer free quotes and a calculator to help you figure out those payments. Make sure that you are always aware of the terms of the provider as well, because if you cannot make a payment, you need to be aware of the consequences.
Regardless of the base interest rates having decreased in the Bank of England, the interest for tenant loans keeps increasing, as well as the rejection rates. There are talks of cutbacks, unemployment keeps rising, and lenders are getting much more cautious about who exactly they plan on lending out to. Because of those risks, the rates are growing higher and there are less ones being offered. In just one year, the number of those loans has decreased almost by half, so people are finding it more and more difficult to secure those tenant loans.