Updated 12.06.2021

Debt Consolidation Loans for Non Homeowners

People take loans for different reasons. However, they often fall under any of these categories:

  • Personal and emergency expenses
  • Healthcare and medical bills
  • Fund business endeavours
  • Purchase a new car or home
  • Continue studies through college

However, people often take more loans than they can handle, only to realize in the end that they’re already over-indebted. The solution many people take to resolve this problem is to undergo the debt consolidation process.

What is debt consolidation?

Debt consolidation is the process of combining all loans of a consumer into one big loan that has more affordable repayment terms. Debt consolidation companies will renegotiate the loan terms of a client and then pay all of the client’s outstanding debts on their behalf. In turn, you will have to pay the debt consolidation company instead of your former creditors.

The biggest advantage of this move is getting lower interest rates and more affordable monthly repayments compared to your former loans. You can learn more about how you can get a debt consolidation lone here.

However, the biggest drawback is possibly the longer loan term that you have to adhere to. If your old loans have an average term of 2 to 3 years, expect to take 5 years or more to repay the consolidated debt.

Loans for Homeowners and Non-Homeowners

Similar to other loan types, debt consolidation loans are also classified into secured and unsecured categories. Secured ones are more convenient to get since you can use an asset you own to back up your loan. If you’re a homeowner, you’ll have an easier time getting a consolidated loan since you can use your house as a collateral.

Those with mortgages that are lower than the value of their house can undergo a secured debt consolidation plan. Most of the time, lenders will allow debts to be consolidated as long as their total is equivalent to 85% of the property’s value.

Despite having a higher limit compared to unsecured consolidations, there’s still a limit to how much you can borrow. Even if your house is worth R1 million, your lender won’t consolidate debts amounting to R850 000, especially if you’re earning only R5 000 per month. You won’t be able to afford the monthly repayments even if you have a valuable collateral in place.

Homeowners have a good advantage in getting secured consolidated loans but they also shoulder an increased risk of losing their home. Your house may be repossessed if you fail to repay all the loans you’ve consolidated.

Non-homeowners will have a slightly harder time obtaining debt consolidation loans since they don’t have a property to offer as security. You don’t really need to have your own home to apply for a secured debt consolidation loan, though. A car, a business equipment, or any other valuable asset that may be considered as collateral by your creditor can be used to support your loan. The asset’s value will affect how much you can borrow or how much the consolidation can cover.

Debt consolidation loans for non-homeowners usually come at a hefty price. They have higher interest rates and monthly repayments dues compared to secured loans. You’ll also see that you’ll be paying much more at the end of your loan term compared to the time before you consolidated your debts.

If you don’t have any asset to give as collateral, you can look for creditors that offer unsecured debt consolidation loans. These loans have a smaller coverage and have higher rates compared to secured ones but you won’t risk losing your asset in case you fail to repay the debt.

Alternative Options

One option to consider in consolidating your debts is to look for someone who will co-sign your loan. The co-signor will shoulder debt repayments in case you’re unable to pay them on time.

There are online lending platforms where you can find people willing to be your co-signor. You have to be very careful who to trust, though. Scammers are everywhere and they thrive more in the online space. Make sure the platform where you’re signing up is reliable and have the necessary documents to prove that their business operation is legitimate.

Debt counselling is another option you can look into if the terms for the consolidation aren’t favourable enough for you. Debt counsellors can renegotiate your loan terms and bring it down by as much as 50%, depending on how much you owe your creditors. They can also look for ways to make the monthly repayments easier for you to complete.


Even though it’s convenient to consolidate your debts into a single loan, it’s not really a good idea to convert your short-term debts into a long-term one. Many consumers take for granted the breathing room debt consolidation provides to their repayment obligations. They easily fall back to overspending, maxing out their credit cards and even asking for overdrafts.

Debt consolidation has its own pros and cons. Sometimes, going through this route to solve your loan problems just leads to even bigger financial issues in the long run. Debt consolidation should only be used as the ultimate option to restore your credit status if you’re on the verge of being blacklisted by credit institutions.

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