Are you worried about getting equity release with bad credit?

If you are looking to release equity from your home but fear that you may be rejected because of negative credit records, the good news is that this may not matter!

If you are over 55, cash strapped, but own your house, equity release may be the perfect way for you to unlock cash, even if you have a low credit record.

At SovereignBoss, we are committed to helping you stay informed on the latest equity release news. We will let you know how to unlock funds even with a bad credit record.

Therefore...

Can You Get Equity Release With Bad Credit?

Yes, you generally can release equity with bad credit score.¹

To qualify for an equity release plan, some lenders may not even do a credit check,² as you are not obligated to pay back the funds during your lifetime, as long as you meet the criteria for equity release.

However, this could limit which lenders and plans you can use to release equity.

What Can You Do?

You will need to speak to your financial advisor or broker to help you find a plan that allows you to use their services despite having a low rating.

You can also improve your credit rating by paying off old debts that are negatively affecting it, or you could get a secured card with small limits for monthly expenses like utilities.

By paying off old debts, you can keep your accounts in good standing while demonstrating responsible use of debt and a prompt payoff.

Finally, you can use the equity you release to pay off your debts, as interest rates may be competitive.

Also, the loan and interest is only paid back when you pass away or move into permanent care.

Can You Qualify For Equity Release if You Have Arrears?

Some lenders will allow you to release equity in your property even if you have arrears.³

The lender will not lend for the full amount, but they may be willing to offer a smaller loan like £25,000* or less to cover some of the retirement income needs and health care costs.

*This amount is for indicative purposes only.

It is important to consider all your options before making any final decision about how much money you want to borrow.

Take the time to research your options for equity release, and you will find that there are plenty of lenders out there that may be willing to offer a solution even if you have bad credit.

Can You Qualify For Equity Release With a CCJ?

It is possible to obtain equity release with a CCJ.⁴

If you have bad credit but your credit score is not so terrible that lenders will not allow the transaction at all, then it is worth trying.

If you do not qualify for equity release loans or want some peace of mind about what happens should you pass away before paying off the debt completely, a CCJ may be one way to go about it.

What is a CCJ?

CCJ stands for County Court Judgement.

This is a court order issued when you do not pay back money owed to someone else, and this will show up on your credit report as soon as the judgment passes.

The CCJ can be discharged if obtained legally, but getting equity release with it may not always work because lenders see these types of judgments.

However, some financial institutions may be willing to offer you equity release despite them.

Can You Qualify For Equity Release if You are In an IVA?

If you are in an Individual Voluntary Arrangement (IVA)⁵, lenders may be willing to lend against your property because they know that there is a third party (the insolvency practitioner⁶) who will pay off the debt for you.

Some companies do not allow equity release, while others do not have any restrictions on what you can use to secure a loan.

If you are in an IVA, it is worth consulting your insolvency practitioner about what kind of equity release options may be available for you.

Not all companies offer this service, but they should know which do.

What is IVA?

IVA stands for Individual Voluntary Arrangement.

It is a legally binding agreement between an individual and their creditor(s) that establishes how much the creditor(s) will be repaid regarding all outstanding debts with other lenders.

An IVA allows you to pay off your debt, but it can typically take up to five years before this happens - or more if there are arrears on top of what you need to repay.

Can You Qualify For Equity Release if You Have a Charging Order?

You may be able to obtain equity release with a Charging Order.⁷

This is an order from the court which states that you must hand over your property when it comes time for you to sell - but this will show up on your credit report.

Lenders generally get involved with someone who has a charging order against them.

However, if you can find a lender that is willing to lend against something where there is no way of knowing whether they will have access or not, then getting equity release with a charging order may be possible.

What is a Charging Order?

A Charging order tells the borrower that they cannot move assets without first paying off their debt.

This is a charge on specific assets, and it will show up on your credit report for as long as you have debts.

How Bankruptcy Affects an Equity Release Plan

If you need an equity release plan, it is important to understand how bankruptcy⁷ may affect your ability to receive this financial assistance.

If you file for bankruptcy and have a secured mortgage on your home or other property, the court can put a stay order on any equity release plans until your bankruptcy case has been finalised.

Once all debts have been settled, you can receive an equity release plan if there are still funds available.

The key to successfully receiving a home equity release is understanding the different forms of bankruptcy that exist, and how they may affect your ability to obtain the funds necessary for retirement or other expenses.

The forms of bankruptcy⁸ are:

Chapter 11:

The court places a four year stay of execution against all property.

During this time, you are allowed to borrow money a certain percentage of what is left after repayment plans have been settled for their debts (excluding secured mortgages).

Chapter 12:

If you decide that farming is your chosen profession for the foreseeable future, Chapter 12 may be a good option.

In this type of bankruptcy protection, all payments owed are considered secured debts and cannot be discharged once they have been repaid.

Chapter 13:

In this type of bankruptcy, there is no automatic stay - it is at the discretion of the judge presiding over your case.

This means that if you want an equity release plan or other debt relief option, then you need to request one from the courts before filing for this form of bankruptcy protection.

To get an equity release plan, you need to file for either Chapter 11 or Chapter 13 bankruptcy protection.

3 Ways to Improve Your Credit Rating for Future Transactions

If your credit score is less than perfect, there are steps you can take to improve it.

Here are three ways to improve your credit rating:

• One of the most effective ways to raise a low credit rating is by paying bills on time and not spending more money than what you have in your bank account before making payments.
• Another way to fix this dilemma is by disputing any errors on your report with each provider so that they will be removed from your record (you may need legal help).
• The last option for raising an uncertain credit score is talking with creditors about lowering interest rates or negotiating payment plans, potentially lowering monthly instalments.

Common Questions

In Conclusion

If you are looking to release home equity but do not have a good credit record, there are ways around it.

As with anything involving money and finance, it pays to do your research because these products come with pros and cons.

Contact your financial advisor to obtain the best equity release advice.

They will be able to advise you on the best course of action for you to obtain equity release with bad credit record.