How to Get First Time Homeowner Loan with Bad Credit?

Bad credit rating makes you ineligible for loans, particularly from main street lenders. You are considered as a risky borrower and thus lenders get wary of extending loans to you. However using a loan guarantor or collateral you can avail loans by a select few lenders.

Owing to poor credit history the lenders would generally offer loans at higher interest rate. In most cases, this is when you already have multiple loans and credit bills on your name. Herein borrowing a high cost loan can challenge your financial situation further. It is wise to search for cheaper loans for bad credit.

If you are a homeowner, you can leverage home equity to avail affordable instalment loan according to your repayment capacity. Let’s figure out how you can use homeowner loans for bad credit:

How homeowner loans work?

As the name suggests, homeowner loans are extended to homeowners only. Despite your current mortgage you can borrow against the balance home equity you own. A lot of borrowers with bad credit use homeowner loans as these are available as big ticket loans. Being a secured loan, you get loan at cheaper price and that too according to your repayment capacity.

How to calculate eligibility for homeowner loan?

In order to calculate your eligibility for homeowner loan, you must first of all get value of your home evaluated by a reputed real estate agent. Next, you must calculate the amount of pending mortgage on your home. This is basically the balance principal amount on which your loan interest is being calculated. You can deduct the balance mortgage amount from the total value of home to reach to the amount of home equity you own.

As a rule of thumb you can draw 80 percent loan to value (LTV) of the home equity owned. Thus home equity allows you to borrow for high investment projects such as home improvement, debt consolidation and others.

How to search the best home equity loans?

The homeowner loans work independently of your mortgage loan. You can apply to your previous lender or change the lender for better deal. Online FinTech space offers a lot of low cost loans at flexible terms to borrowers with rating issues. You can contact an FCA regulated loan broker and share your loan requirements. They are experts in searching the best deals in the shortest possible times. As your query reaches a loan broker, a loan agent would contact you via phone call and share the available deals. You can compare and choose the best match. It is completely hassle free to search a loan online.

How to compare and choose?

Being a first time homeowner loan borrower, you must know about the key factors to be considered before sealing the deal. From the loan amount, to loan duration, to rate of interest you must carefully compare all the factors. Also always opt for ease of repayment. In all, the loan should be affordable one and you should ensure timely repayment without a fail.

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