Bankruptcy Equity Home Loan

You can apply for an equity home loan immediately after your bankruptcy has been discharged, but it is not recommended. It’s not advisable as the borrower faces higher than normal interest rates, in fact the more recent the bankruptcy discharge, the higher the interest rate is likely to be and the harder it is to get a loan. It is recommendable to wait for at least 2 years after having your bankruptcy discharged before making a home equity loan application. While securing a loan may be difficult, it isn’t impossible, so be prepared to search hard.

After bankruptcy, sub prime loans are the easiest to secure. Sub prime loan companies will be more willing to lend to people with blemishes on their credit history, but borrowing from them means you face premium repayments. For this reason it is necessary to shop around and not stop at the first positive offer. Financial institutions such as banks and credit unions have different lending criteria: some will not lend to people who have filed for bankruptcy, or have been discharged over 5 years previously. Others, such as sub prime companies have a less strict criteria and will lend  two years or less after bankruptcy discharge. There are however disadvantages to bankruptcy equity home loans; The borrower can expect to have higher repayments due to the higher interest rates. The higher rates are charged because people with bad credit records are considered to have more of a chance of defaulting on their repayments. Applying for a home equity loan with your current mortgage lender may not provide the best deal,  particularly if your credit rating has suffered since you secured your mortgage.Take advantage of all tools at your disposal to find the best potential lenders, including the internet, as this will save you  a lot  of time. Brokers can help with this, but bear in mind they are not usually impartial, but get paid a commission on the out come, so may not encourage you to take the best deal for you.

Sub prime lenders are usually more competitive when lending equity home loans when it comes to discharged bankrupts, as they specialize in this area of the lending market. Once you receive an offer, you should request a detailed breakdown of all payments incurred, including the APR amounts, from each potential lender. Do not stop at the first lender who gives you a positive answer, try to secure 4 or 5 offers and negotiate before entering an agreement.