Bad Credit Secured Equity Release Finance
If you own a house and need to raise finance for some reason, equity release finance could provide the perfect solution. Equity release finance is a loan in which you would need to offer your property as collateral.
And in case you already own a home, the loan can be secured against the equity in your home. If the value of your home that you are providing as collateral for the equity release finance is more than the loan amount, then the rate of interest to be paid can be very low.
The amount that you will be allowed to borrow depends on a number of factors that include your credit rating, your employment and financial status, your income, your outgoings, and the level of equity that you have in your home. In case you have a bad credit rating, it might prove to be difficult for you to get equity release finance. Your tarnished credit score may be due to County Court Judgments, Individual Voluntary Arrangements, arrears, defaults, missed payments and so on. But nowadays, with the proliferation of the financial market, many lenders are specializing in giving equity release finance to people with bad credit records.
With equity release finance, you release the available equity of your home and draw money. The amount of equity available, decides the amount that you can borrow. Typically, you are allowed to borrow up to 100% of your home’s value. To find out how much you can borrow against your home, subtract the amount of money that you owe on your current mortgage from the appraised value of your home. With lesser or no equity, the amount you can borrow will be less. With specialised loans called no equity loans, you can borrow more than your home is worth. In some cases you may be able to borrow 125% of your home’s value.
Interest rates for equity release finance will be undoubtedly high as compared to traditional loans. Fees will also be higher in relation to standard loans. The total cost of the equity release finance can vary greatly depending on your credit standing, the lender, market interest rates and the structure of the loan.
Before deciding on a particular loan and lender, it is important for you to compare interest rates and closing costs from multiple lenders. Remember to check the fees, points and penalty fees, which often add thousands to the cost of the loan.
