Bad Credit Home Loans
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If you have a bad credit rating it can be difficult to get a conventional personal loan from a high street bank or building society. If poor credit is part of your financial history, you may have more success when it comes to applying for a type of bad credit home loan known as a secured loan. This type of loan is viewed as less of a risk by lenders because they are able to reclaim any debt from the value of your property of you fail to make the required loan repayments.
Who might need a bad credit home loan?
People can have bad credit for all kinds of reasons – perhaps you have missed payments on a previous credit agreement, or you have had a County Court Judgement (CCJ) against you in the past.
While borrowing against your home should always be carefully considered due to the risks of losing the property if you fail to make repayments, there are several ways in which a bad credit home loan could be useful as you rebuild your credit rating.
Firstly, home loans can often be used as a way to consolidate your other debts, condensing them into one repayment, which could help you to avoid getting behind of repayments in the future. Secondly, having a loan and making repayments on time can help to demonstrate to other financial service providers that you are capable of managing your money responsibly and making repayments on time.
Points to remember when considering a bad credit home loan
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A secured loan means that if you fail to make the required repayments, the lender can, in theory, repossess your house or sell it to get back what you owe. For this reason it’s very important to think carefully before securing any debt against your home.
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One of the advantages of a bad credit home loan is that you may be able to borrow at a lower interest rate than you would be offered on a bad credit personal loan.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. If you are at all unsure of the suitability of a particular product for your circumstances you should seek independent financial advice.