If you’ve battled with personal debt for years, you might worry that equity release isn’t an option available to you. However, that’s not the case.
Can I Get an Equity Release Loan With Bad Credit?
Having a poor credit history has no impact on eligibility for an equity release loan. The loan is secured against the equity in your property and is therefore guaranteed to be paid back.
Having a poor credit history won’t affect your application for equity release, as long as you have equity in your home. The loan is secured against your property.
Continue reading to get the full details of Equity Release, and if you have a bad credit history.
- – What happens to your Equity Release if you die?
- – What are the Equity Release time frames?
- – What are they Equity Release associated costs?
- – Why is Equity release so popular?
We update all our guides regularly. If you are researching Equity Release and we haven’t got an exact guide that helps you, keep coming back as we update daily.
Can You Get Equity Release With Bad Credit?
Because equity release is secured against the equity you already have in your home, your personal credit circumstances won’t make a difference to an application. That’s because affordability isn’t a concern, since you don’t need to make repayments immediately, and neither is a history of missing payments, since you’ll be signing an agreement which lets the lender take the money directly from your estate including your property.
Of course, if you’ve not kept up with mortgage payments on your property, you’re unlikely to have the equity required to qualify for equity release. In that case, it wouldn’t be an option to you, in the same way, someone who rents their house but has perfect credit couldn’t take out an equity release loan. It’s only available if you have equity in your property that it can be secured against.
Even if you have County Court Judgements against your name, the likelihood is that you’ll be accepted. Bankruptcy may be an issue, but since this would likely have forced you to sell your home already, or stopped you from buying a home anyway, it’s rare that bankruptcy itself is a reason to prevent equity release.
According to the Equity Release Council 37,000+ people used Equity Release schemes in 2018, releasing over £3.06bn from their properties.
Can You Get Refused Equity Release?
There are other reasons why you may be refused equity release, but they’re not related to poor credit history. Most reasons are related to your property, and whether the lender sees it as a worthwhile investment for them to secure the loan against.
For example, if you live in an area with a flood risk warning (check the governments long term flood risk map) or your home is built on contaminated land, lenders won’t want to risk being saddled with an unsellable home when it comes to time to collect on the debt.
Equity Release Lenders Have Their Own Criteria
Individual lenders will have their own particular criteria too, including materials that the property was constructed with, to listed status, or any flats in a large tower block with no lift. Following the Grenfell tragedy, high-rise apartments with unsafe cladding would also likely be a reason for refusal.
Some lenders will even refuse to lend you money as part of equity release if you have a messy home. Anything which shows signs of poor property maintenance, which could result in the house dropping in value during your lifetime, could put off a lender.
So in summary, your poor credit rating won’t have a bearing on the equity release application, but make sure you have a tidy up before the house is valued.
Quick Equity Release FAQs
Home reversion plans are, in essence, a means of selling a share in your property to an investor, in exchange for payment. There are no repayments, with the investor receiving their share of proceeds when the property is eventually sold.
The Equity Release Council is the industry body which represents equity release providers, qualified financial advisers, solicitors and intermediaries. Equity release is a growing sector, especially for older homeowners who may have limited access to finance.
You need to be at least 55 years old to apply for equity release in the UK. If you are planning to make a joint application, this applies to both of you.
Equity release drawdown works by giving you the value of your loan as a pot that you can make withdrawals from. You’ll only pay interest on the money you decide to withdraw.
How Can Money Savings Advice Help You With Releasing Equity?
Here at Money Savings Advice, we have partnered with some of the UK’s leading Equity Release brokers. They have already helped thousands of people get the best Equity Release deal and they can do the same for you.
Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.