Bankruptcy and Equity Home Loans
Everyone is aware that bankruptcy has an adverse effect on your credit rating, but did you know that equity home loans are amongst the easiest ways to begin repairing your credit?If you have been bankrupt but have filed for bankruptcy over 12 months ago and have been in the same employment for 2 years or more then you stand in good stead in the eyes of potential lenders. Realistically it takes 2 years before you can again get on to the ‘A’ list credit rating.
If you’re having trouble securing credit after your bankruptcy has ended, a direction to try would be a home equity loan. As a home equity loan is secured on the outstanding value in your home, lenders are more willing to risk lending money to you, because (and here is the painful part) they will have to power to take your home if you fail to keep up with the repayments. If you are unable to obtain credit cards or mobile phones or even a loan to buy a car due to bankruptcy, then a equity home loan is most likely the answer. A loan secured on collateral is going to have a lower repayment rate compared to an unsecured loan, so it is the cheaper option despite the fact that your property is secured on it.
Other factors in securing an equity home loan after bankruptcy include employment. If you have been in secure employment for the previous two years, this will greatly increase the likely hood of lenders looking favorably at your loan application. Employment under a period six months means it is unlikely, though not impossible, to secure a loan but again having equity to secure the loan against greatly improves your chances.
When searching for a home equity loan after bankruptcy, the same rule applies as before bankruptcy, in fact it’s even more important. Be prepared to put in the legwork and hunt around for the cheapest rates you can. do not stop at the first positive offer you recieve from a lender but keep going and try to get four or five offers in total. Then compare all the details and work out which offer suits your requirements most. Factors to consider are the loan term, the interest rate as well as any fees that might be payable. Afterall in bankruptcy, equity home loans may be your only means to improving your credit score to a respectable level.
