Bad Credit HELOC
Get a HELOC from ABC Finance and save an average of £2,880 in broker fees. Get the best deal with ABC Finance.
Rated Excellent on Reviews.co.uk
A HELOC is a fast and flexible way for borrowers in the UK with bad credit to borrow money against the equity in their property.
If you’re looking for a flexible way to borrow and have a low credit score or poor credit history, a home equity line of credit could help.
In this guide, we break down how a HELOC works, whether you could qualify and how to apply.
Can I get a HELOC with bad credit?
Yes, you can get a HELOC in the UK, even if you have bad credit.
We can consider applications from borrowers with previous credit problems such as missed payments, defaults or CCJs.
We can even consider lending for borrowers with previous mortgage arrears, IVAs or bankruptcy.
How do I get a home equity line of credit with bad credit?
The easiest way to get a home equity line of credit as a borrower with a poor credit history is to use an experienced broker like ABC Finance.
We’ve been helping borrowers with bad credit to raise property finance since we were founded in the year 2000.
Specialist advice is usually required to secure this type of finance, especially if you have recent credit problems.
How Does Bad Credit Affect Your HELOC Application?
A bad credit will impact your application by limiting your options and may make it harder to get your applications approved.
During the application process, you’re likely to be asked details of your previous credit problems including how and why they occurred.
It’s important that you answer these questions carefully to ensure that you’re still able to get your application approved. This is where working with an experienced property finance expert can increase your chances of approval.
The other issue that you could face is an increase in the interest rate charged. This is common in loans to borrowers with bad credit, and is designed to offset the increased risk to the lender.
How does a HELOC work?
A HELOC works as a flexible borrowing facility which is secured against the equity in your property.
It operates in two distinct phases, the drawdown and repayment phases.
During the drawdown phase, which usually lasts for the first five years of the facility, you can borrow and repay money as you wish within a defined limit.
This means you could theoretically borrow and repay your entire facility limit several times over the course of the drawdown period.
Once you hit the end of the drawdown period, you’re no longer able to borrow any further funds and you must make regular monthly repayments to repay the debt in full.
Pros and Cons of Getting a HELOC with Bad Credit
The advantages are:
- Reduced interest cost – As you’re only paying interest on the drawn balance, your interest charges will be lower than an equivalent loan facility, when the full facility is not being utilised.
- A flexible way to borrow – As a form of revolving credit, a HELOC is a very flexible way to borrow money.
- Can be arranged quickly – Compared to other forms of secured property finance such as a mortgage, funding can be arranged very quickly.
- Low payments – As the loan term can be extended up to 25 years, you will benefit from lower monthly payments.
The disadvantages to consider are:
- There is a cost – While you’ll face lower interest costs than an equivalent loan, there is still a cost to consider.
- Reduced home equity – When borrowing against the equity in your property, you will naturally face a reduction in your home equity.
- It is secured – As a secured form of finance, the lender will have a legal charge on your property, meaning your property is at risk if you fail to keep up the repayments.
FAQs
How much could I borrow?
We offer HELOCs from £10,000 up to £500,000, meaning we can fund within most people’s requirements.
For larger loans, consider either a secured loan or a second charge mortgage, which are less flexible, but allow larger facilities.
How quickly could I receive the money?
We can complete an application and have the facility open and ready to use in just a few days.
As some applications can take a little longer, it’s recommended that you allow anything between 3 days and 2 weeks for your facility to be open.
Is there a maximum loan to value (LTV)?
Yes, the maximum LTV on a HELOC in the UK for borrowers with bad credit is 85%.
The maximum LTV is calculated on the combination of your existing mortgage balance and proposed line of credit facility limit.
