Many of us think about taking a loan in the UK. Sometimes these are small amounts for everyday expenses, sometimes much larger. We often think about taking a mortgage. Do we need a giraff when taking a loan in the UK? Or maybe someone asks us to guarantee a loan? mercador24.com has more details
Probably each of us met a situation where we immediately needed some amount of money. We usually borrow small amounts, we use overdraft or credit card. At other times, we are planning a purchase and we do not intend to save a few months or years. It’s hard to put down for example for a new car, because we would have to wait quite a long time for its purchase. If you take a loan, we have the money to buy it right away.
Of course, the cost should be added to the price of the loan. If we do it wisely, nothing bad. However, sometimes we face a kind of necessity. If we are tired of renting an apartment and want to settle permanently in the UK, we must buy it. In this case, however, saving is probably not an option. Usually we would have to do it for at least a dozen years or more than twenty. And so few people want to wait. During this time, we still have to pay for rent, because we have to live somewhere. The installment amount is comparable to the rental price, except that we invest in our property. In the case of renting, we lose money irretrievably. Then the solution seems to be to take out a mortgage. However, in each of these cases the question arises. Do I need a giraff when taking a loan in the UK?
A resident increases our creditworthiness
The answer is not clear. It all depends on the individual case. Several factors affect this. First of all, the amount we want to borrow. The smaller the number of requirements the bank will have. However, the basis is our history and creditworthiness. If we don’t have it, we won’t borrow anything. For smaller amounts, you generally do not need a giraff. The bank will check our creditworthiness and make a decision based on this. However, if it is poor, we will meet with a negative decision. Then we can go to one of the non-bank companies offering loans in the UK. Their characteristic feature is that they give higher interest rates, but they have much lower requirements. Usually, you can borrow smaller amounts, in the order of several hundred to several thousand pounds. And for shorter than longer.
A resident will increase your chances of getting a mortgage
So generally in banks, the answer to the question of whether I need a girrant is simple. No, if you have sufficient creditworthiness. If you are poor, this may unfortunately be necessary. A resident can effectively increase it. There are various reasons why you may not get a mortgage. First of all, the bank may not like that you have spent all your life as much money as you had. This is a very reasonable life strategy, but from the perspective of financial institutions, you are someone unproven.
The bank much more rewards people who have already borrowed and paid their debts on time. Sometimes you don’t have to do much to have a credit history. All you have to do is take a credit card which, if paid off monthly, does not incur any costs. Needless to say, if in the past you had a problem repaying a loan, it may also cross your chances. The reason can also be too short a stay in the UK, too much money you want to borrow, or the wrong type of employment. In this situation, you can either wait some time and work on your credit score, or find the so-called mortgage guarantor. In other words, a giraffe.
Who is the mortgage guarantor?
Mortgage Guarantor is a person who must have full confidence in you, because he risks a lot. It usually doesn’t matter what kind of relationship you have with this person. It does not have to be a member of your family, unless the bank reserves otherwise. However, it must meet certain conditions. First, he must have a sufficiently high income. It is obvious. We will not write how big, because it depends on the individual case and the bank’s requirements. Secondly, it must have its own real estate, a car, which is something that the bank could take to repay if you did not. And of course he should also have high creditworthiness and good credit history. If you find such a person, you have a chance to get a loan for an apartment even with no own contribution. Although, of course, on worse conditions. You don’t have to worry about additional costs. Mortgage Guarantor does not increase the loan price.
Guarantor mortgage – think three times
However, remember to think about this step well. It is taking a huge responsibility for someone’s life. Mortgage Guarantor risks a lot. If you run into financial trouble, the bank will have no qualms. It may even take his house and your resident will land on the pavement. Things are different with smaller amounts. When buying a flat, however, we are talking about money for which most of us work half a life. It is therefore worth considering whether there really is no other option? Maybe you can borrow from someone for your own contribution? This is a much better option for this person than being a resident. In the worst case, he will lose the deposit amount. If he devours a loan from you, the bank will take him ten times as much. Maybe it is worth stopping with the loan? You can always wait a little bit. After some time your credit standing will increase. Especially if you work on it. There are many ways to improve it. You can always wait for a raise or find a better job.
You better rely on yourself
As you can see, sometimes a resident can improve our situation. Sometimes it is even necessary to take a loan, especially high. However, it is worth considering other options. I guess no one wants to have their conscience taken away from saving their life or even home. Therefore, we do not encourage you to use the trust of your loved ones. Whether friends or family or even further friends. Well, unless the potential resident is a multimillionaire and he will not feel much repayment of our loan in the event of an accident. However, if you need a smaller sum and you have a certain prospect of paying it back, use a loan in the UK. You won’t need any resident.