Yes. Many lenders will consider your application for a home equity loan even if you have bad credit.
If you have County Court Judgments (CCJs), defaults, arrears or missed payments on loans or credit cards, then you may have found it difficult to agree on credit. Many credit card companies and unsecured loan providers are reluctant to lend to people who have experienced credit problems in the past.
In addition, banks and building societies are increasingly adopting strict lending criteria for remortgages which means that applications from people with bad credit are often declined.
However, as a home equity loan involves offering your home as security, many lenders are prepared to agree to a homeowner loan to applicants with less-than-perfect credit.
A bad credit home equity loan lets you borrow a sum of money secured against the equity in your home. In return, your home is taken as security by the lender which means that your home could be at risk if you don’t keep up your repayments.
As home equity loans are secured on property you will often find that the interest rates charged on such loans are lower than other types of borrowing. Your interest rate will generally be determined by the ‘loan to value’ (the proportion of your home’s value you want to borrow) and the extent of the credit problems you have experienced. The more serious your credit issues, the higher the interest rate you will generally pay.
You can use your home equity loan for almost any purpose. Many people use a secured loan to consolidate other debts that they have such as credit cards or personal loans. Others use a home equity loan to pay for a one-off item such as a new car or a wedding or use the funds to undertake home improvements.
Another advantage of taking out a home equity loan if you have bad credit is that it can help you repair your credit rating. If you make payments to your homeowner loan on time every month it will demonstrate that you can manage debt responsibly. This will improve your credit rating and your chances of being approved for credit in the future.
To access the money tied in your home equity and get a great loan rate, book an appointment with the Mortgage Genie.