What is a bankruptcy equity home loan?
A bankruptcy equity home loan is a secured loan. This type of loan is generally available to people who have a poor credit history and are looking to release equity in their home.
The equity freed up can be used for almost any purpose including:
- Avoiding bankruptcy
- Home improvements
- Buying a car
- Other Purchases
How does it help me avoid bankruptcy?
The equity that you release can be used to pay off all your debts. Typically, you would repay the equity home loan over a long period of time. This has the effect of reducing your financial repayments to an amount that you can afford each month.
Note: If you are using it to clear debt, then it is important you do so. The last thing you want to do is fall further into debt and risk losing your house.
Is a Bankruptcy Equity Home Loan for me?
If your credit rating is low, the chances are you will not qualify for an unsecured loan. This significantly reduces your ability to consolidate your loans, or release equity, without using your property as security.
Benefits of a Bankruptcy Equity Home Loan
The upside of a bankruptcy equity home loan is:
- You can obtain a home loan even if your creditworthiness is poor
- You should get a better interest rate than if you borrowed through an unsecured loan
- You can use the equity for almost any purpose
Down sides of a Bankruptcy Equity Home Loan
The lender will place a second charge on your property. This means that the equity in your property will be used to cover any outstanding balance on the loan if you cannot afford to repay. As with any loan secured on your home, you risk losing it if you cannot repay.
