Getting A Home Equity Loan After Bankruptcy
If you have been made bankrupt getting a home equity loan will be more difficult than usual, but all is not lost – there are still lenders out there. After bankruptcy, your financial lending options are limited to mainly institutions that specialize in higher risk lending. In all likelihood they will charge repayments at a higher interest rate, but shopping around means you can secure as low an interest rate as possible. If you have equity in your home you drastically increase the likelihood of securing a loan, as lenders will prefer to lend money that comes with security. The downside of this is that as it is secured credit, if you fail to pay you risk losing your home.
Having equity in your home also increases the likelihood of getting as low an interest loan rate as possible even after bankruptcy. For this reason it is very important to shop around and obtain several quotes from several banks and credit institutions, rather than stop at the first rate that seems to be low. It’s not impossible to find a low rate on an equity home loan, so look really give it some time to look. You must be prepared to negotiate well in order to secure the cheapest finance package available, and be prepared to shop around even after you achieve positive results. Aim to get at least four or five different home loan offers and take the time to go through the details; Which has the highest repayment rate? Or the longest term? Compare any subsidiary costs or arrangement fees before deciding on the best equity secured mortgage.
If you’re having trouble securing a loan, the reason may be that it’s too soon after your bankruptcy has closed for the financial institutions liking. If you can postpone applying for a loan for a period, ideally 12 months, during which it is vital to keep up with all bills and other repayments then you stand a much better chance of getting an equity home loan after bankruptcy, otherwise you affect your credit rating detrimentally.
A home equity loan is the best option for rebuilding your credit rating after bankruptcy, so it is a good place to start, as these types of loans are easiest to secure. Having other unsecured loans also greatly improves your credit score in the eyes of a lender as long as scheduled repayments are up to date and on time.
