Co-signed Loans for Cohabiters
Co-signed loans for cohabiters, also known as joint loans, are a good way of raising funds. There are many reasons why cohabiters will apply for a loan together, and they can include raising money to buy a property or for an unexpected cash emergency.
What is a Co-signed Loan?A co-signed loan is a loan where two or more people are responsible for the repayments on a loan. With property prices rising steadily a co-signed loan between friends, especially graduates, has become a popular way of buying property. Co-signed loans for cohabiters also mean that the repayments are lower as they are split between more people.
How Much Can Be BorrowedThe amount that co-signers can borrow will be dependant on numerous factors. Factors will include the total joint income of the co-signers, whether the loan is secured or unsecured, how much is needed, and how long the loan length will be. Lenders will calculate all of these factors to see how much money the co-signers can borrow.
Credit History and Co-signed LoansCredit history will also be a factor and will be used to calculate the annual percentage rate (APR) on the loan. If all of the co-signers have a good credit history then there should not be too much of a problem. But one person with a bad credit history could mean that the APR will be set at a higher rate.
Reasons for Co-signed LoansThere are many reasons why cohabiters would want to take out a co-signed loan. These can include:
- Couples intending to marry and buy a home.
- People who are co-habiting and decide to buy rather than rent.
- More cash; co-signers can usually apply for a higher loan amount than individual loan applicants.
- Partners wishing to raise funds to start a business.
- Borrowers with a bad credit can usually obtain a loan if it is co-signed.
- Buying a second home to let.
Disadvantages of Co-signed LoansThere are certain disadvantages to co-signed loans for cohabiters. If the loan is to be used to buy a property then there may be a certain stress factor involved. Whereas missing a month’s rent would not be seen as too much of a big deal, it only takes one missed loan payment for charges and fees to be applied. If one of the co-signers is unable to pay for any reason then the other co-signers will usually have to make up the difference in the loan payment.
Where to Find Co-signed LoansMany lenders are quite happy to offer co-signed loans for cohabiters as the more people co-signing, the less the risk for the lender. Co-signed loans can be found through many high street lenders, banks and building societies, and internet only lenders. Borrowers should remember to shop around and find the lowest interest rates that they can.
How long is the Application Process?The length of time before applicants will receive their loan will be dependant on certain factors. If the loan is unsecured and there is no problem with identity documents and credit references then the loan can be processed within a few days. Secured loans may take longer as permission will be needed from mortgage lenders unless the same lender is used.
Co-signed loans for cohabiters are a good option if a large amount of cash is needed to buy a property together. Lenders have seen a huge rise in the popularity of co-signed property loans as a reflection of rising house prices. Co-signers should make certain that all parties involved will be able to afford the repayments for the length of the loan in order to avoid any conflict, and possible legal ramifications.