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I’m a mortgaged homeowner. Can I borrow unsecured homeowner loans?
Whether you’re a homeowner or a tenant, you can apply for unsecured homeowner loans in the UK. Unsecured homeowner loans are essentially personal loans that enable you to split the cost of your expense into affordable monthly instalments, without pledging your assets (such as your home) as collateral.
Whether you’re looking to start a home improvement project, pay for unplanned medical expenses, consolidate your debt, or simply to purchase a new car, unsecured homeowner loans can help you tide over any financial crunch. Besides, the fact that these loans don’t pose a risk to your property ensures your peace of mind.
With LoanTube, you can borrow between £1,000 and £35,000, and repay the sum through convenient and systematic instalments each month over 3-7 years. Compare unsecured homeowner loans with real interest rates, at the tap of a button from anywhere in the UK. Experience a hassle-free and transparent borrowing experience with LoanTube.
How do unsecured homeowner loans for low credit work?
Unsecured homeowner loans are easier to access than secured homeowner loans simply because the former does not require you to put up your assets as security against the loan. However, unsecured personal loans also have several pre-requisites that you must fulfil to secure the loan.
One of these factors influencing your application is your credit score. Your credit score is a key parameter because it gives lenders an insight into your relationship with credit. Demonstrating a healthy repayment pattern and responsible credit behaviour strengthens your credit score.
A higher credit score increases your chances of getting low-interest credit. With a stellar credit score, you will be able to compete for the lowest interest rates in the market. When you apply for unsecured homeowner loans, lenders will assess your credit score, Income, and debt-to-income ratio, among other factors.
Once your application gets approved, the lender would typically transfer the lump sum into your bank account. You can then use the money at your convenience, albeit responsibly. Missing repayments can be detrimental to your credit score, risking your chances of securing credit in the future.
Please note that you will experience a minor drop in your credit score when you undergo a credit check during your application. However, the impact of this drop diminishes over time.
How to compare homeowner loans without collateral?
When comparing loans, it is crucial to take the following into account:
How will unsecured homeowner loans affect my credit score?
Just like any other loan, your credit score is heavily influenced by how responsibly you use and repay your unsecured homeowner loan. As you keep making timely repayments towards your loan, you will witness gradual improvements in your credit score.
Missing repayments on your loan can take away quite a few points from your credit score. Besides, suppose you consistently miss repayments and default on your loan. In that case, the lender may get a County Court Judgement (CCJ) issued against you.
A CCJ could stay on your credit report for up to 6 years, severely affecting your chances of securing credit in the future. Thus, to prevent risking the security of your financial future, you must maintain a healthy relationship with credit.
What can I do with an unsecured homeowner loan?
Unsecured homeowner loans can solve a multitude of purposes for you. Here are some of the most common reasons why people opt for an unsecured homeowner loan:
What credit score do I need to borrow unsecured homeowner loans?
Different CRAs or Credit Reference Agencies use different credit scoring models, meaning that you’ll have a separate score for each agency. For instance, Equifax’s ‘excellent’ score will typically be about 475. However, according to Experian, a credit score of 700 or above is considered ‘good,’ and 800 or above is considered ‘excellent.’ Similarly, a score of 628-710 is considered ‘excellent’ in TransUnion.
To qualify for competitive interest rates, you should aim for a higher credit score – anything that’s ‘good’ or ‘excellent.’
What should I consider before getting an unsecured homeowner loan?
Here’s what you should consider before opting for an unsecured homeowner loan:
Assess your affordability before applying for an unsecured homeowner loan. Ensure that your financial circumstances will allow you to stay committed to the loan.
Loans with a longer repayment term require more commitment. Determine a convenient loan term by analysing your finances and circumstances. A more extended period may mean smaller monthly payments and a greater accrued interest – iron out the finer details.
Missing a payment can cost you a few points off your credit score. Defaulting on the loan could result in a CCJ, which could impact your financial records for up to 6 years. Moreover, a negative record such as this can make it challenging for you to apply for credit in the future. Therefore, it is best to address any challenges you might face in repaying the loan.
Compare the interest rates and APRs to find an offer that costs you the lowest. You pay interest monthly, so make sure you opt for a loan term and offer that aligns with your current and future financial capabilities.
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Unsecured homeowner loans have a higher interest rate than secured homeowner loans because collateral does not back unsecured loans. On the other hand, secured loans come at lower interest rates because collateral security makes it easier for lenders to recover their losses. Thus, you may end up paying more interest for an unsecured loan than a loan secured by collateral.
When assessing your application, lenders base their decisions on a variety of factors such as:
LoanTube does not charge any upfront fee for your loan. Enjoy a transparent and hassle-free borrowing experience at zero upfront fee.
Since these loans don’t require collateral, unsecured homeowner loans might be easier to get.
Therefore, it is much more convenient for tenants who cannot provide collateral for a loan and homeowners who need funds immediately without putting their homes at risk.
However, to truly reap the benefits of an unsecured homeowner loan and qualify for competitive rates, you might need a good credit score.
Suppose you’re looking to borrow an unsecured homeowner loan with low credit. In that case, lenders sometimes ask you to present a guarantor to participate in the arrangement. A guarantor is a friend or family member who co-signs your loan agreement and partakes in the loan’s obligations with you.
Ideally, your guarantor should have a stellar credit history. If you happen to default on the loan, the onus of settling the dues will fall on the guarantor. Therefore, you are obligated to inform them of these risks before getting them on board.
Manage your Homeowner Loan Repayments like a Pro
Stay a step ahead with a budget.
Set up a direct debit to automate payments.
Ensure sufficient balance in your payment account.
Consolidate your loans to organise repayments.
Refinance to a better deal if you find one.
Cut back on unnecessary expenses to save more.
You can borrow up to £35,000 over 3-7 years with LoanTube.
The rate you are offered will depend on your individual circumstances.
Representative APR Example: On an assumed loan amount of £1,000.00 over 18 months. Rate of interest 71.3% per annum (fixed). Representative 99.89% APR. Total amount payable £1,655.10 of which £655.10 is interest. 18 monthly repayments of £91.95.
Our APR rate starts from 18.22%. The maximum APR we offer is 770%, but you will get a personalised rate tailored to you. The minimum repayment term is 3 months, the maximum repayment term is 7 years.
Warning: Late repayment can cause you serious money problems. For more information, go to moneyhelper.org.uk
Credit subject to status & affordability assessment by Lenders.
LoanTube is a credit broker and not a lender.
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on any debt secured against it.