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How to Get Equity Release with a Bad Credit Rating

Equity release is a great option for anyone aged over 55 years old, who might need a bit of help and support financially as they enter retirement.

Equity release schemes allow you to access the money and equity that has built up inside your home over the years.

Equity release schemes help thousands of people up and down the country cope financially. However, not everyone aged over 55 years old is eligible for equity release schemes.

For example, you have to own your home property in the UK worth at least £70,000 and have paid off the majority of your mortgage by the time you apply for your equity release plan.

You also have to pass the lender’s credit score checks, which is difficult for those with a bad credit rating. People suffer from poor credit ratings for a whole host of reasons, including excessive credit card use and debt.

How do you get approved for equity release with debt or a bad credit rating?

Credit cards are now incredibly easy to get hold of. In fact, people with the poorest credit ratings can now get their hands on their own credit cards within just a few minutes of applying.

Unfortunately, any lenders will perform a credit score rating and check. This means that they will be made aware if you suffer from any credit card debt, and this will be considered negatively by the lender.

However, it is important to remember that to some lenders, credit card debt (if it is paid back on time) is a good thing. This is because it shows that you are capable of paying back a loan on time, which will always be a good thing.

Equity release lenders also accept that lending is different with equity release plans. This is because you do not have to repay your equity release loan until after you pass away or move into long term care.

By repaying your credit card debt, you will be showing your lender that you are capable of repaying loans on time, and are responsible enough to be trusted to do so.

However, if you have credit card debt that you struggle to pay off on time each month, then this will negatively affect your credit rating and your equity release loan application.

Please call our 24-Hour Helpline: 0330 058 1579

Can you get equity release with a CCJ?

County Court Judgements (also known as CCJs) happen when you fail to repay your debt, whether that be your credit card debt or your monthly mortgage repayments. Unfortunately, you only have a month to settle your CCJ and once you are issued with your CCJ it will remain on your file for at least a minimum of 6 years [1].

Unfortunately, CCJs are issued onto your credit score report, so any lender will be able to see this when applying for a loan. Depending on how much money you owed, your lender might request that you repay the loan before they approve you for an equity release loan.

When you first talk to your equity release advisor, they will ask you about any debt you might have or whether or not you have ever been issued with a CCJ.

It is incredibly important that you are open and honest about this to your equity release advisor. This is so that they can put things in place to make sure that they are putting you forward for the best equity release loans applicable to you.

Can I apply for equity release with an IVA?

Unfortunately, having an IVA can make it particularly tricky to apply for an equity release loan. Whilst it is hard to get accepted for an equity release loan with an IVA, it is not impossible.

An IVA is short for an individual voluntary agreement, which is another option for anyone who might be declared bankrupt. It is an easier way of paying off your debt, which will most likely be done over a number of years [2].

Equity release lenders will only consider you for an equity release loan if you have managed to repay your IVA payments, in the same way you would have to repay any credit card debt [2].

They will also most likely want to make sure that you have paid off your IVA payments on time over the past 18 – 24 months, as evidence that you are on top of your finances and debt.

If you do suffer from an IVA then you still might be able to apply for an equity release loan, but you need to be honest with your lender as earlier as possible in order to do so.

Each lender has different rules when it comes to IVAs, so each case is different. If you have received an IVA in the past and are concerned that you might get rejected for an equity release loan, then speak to a member of our team at Equity Release Warehouse.

Why do equity release lenders perform credit checks?

Equity release lenders perform credit checks on all of their applicants because equity release is a loan.

This means that they need to assess whether or not they think that you are capable of repaying their loan. In the case of equity release, the loan is only ever repaid when the individual and applicant dies or moves into a care home.

Whilst no monthly repayments are required, the lender is still lending money over a significant period of time, and based on the value of the property and house.

It is therefore crucial that the applicant is not suffering from any debt that might mean that their house has to be reprocessed or put at risk in any way.

There are a number of ways lenders check applicants’ suitability and credit scores, including checking your title deeds with the Land Registry and performing a credit check.

Please call our 24-Hour Helpline: 0330 058 1579

When is an equity release credit check performed?

It is important to understand that most equity release lenders will perform a credit check very early on in the application process, well before they issue any sort of equity release mortgage or loan offer.

If your lender does note any marks on your credit score, then the lender will assess what type of mortgage offer you might be accepted for, and might write in the contract that you have to pay off the debts before you are issued your equity release loan.

Most equity release applications take anything between two to three months to process, so they might perform multiple credit checks on you before they decide to make a final decision.

If you want to apply for an equity release loan, but are concerned about your credit score or debt, then you should speak to a member of the team at Equity Release Warehouse for help and support.

Please call our 24-Hour Helpline: 0330 058 1579

Key features of equity release plans

There are many great features of equity release schemes, which makes it a highly attractive option for people aged over 55 years old.

Below are some of the best features when it comes to equity release, and some of the top reasons why equity release plans are so popular:

  • You do not have to repay the equity release loan until after you pass away or move into a care home
  • You are able to release up to 90% of the total value of your home, depending on how old you are
  • You are able to receive your money in one large lump sum or through a number of smaller, frequent payments
  • You are able to spend the money you receive however you want to
  • The money that you receive will be completely tax free
  • Your loan will benefit from inheritance protection, which means that you will still be able to guarantee your loved one inheritance after you pass away, even if the value of your home decreases and no longer covers the value of the loan

If you would like more information on how equity release works, then speak to a member of the team at Equity Release Warehouse.

So, how do I do it?

If you are suffering from a poor credit score or a significant amount of debt, then it might make it harder for you to qualify for an equity release scheme. However, getting approved for an equity release plan with a bad credit rating is not impossible.

If you want to apply with a bad credit rating, then you should be as open and honest with your equity release advisor as possible. Only by being open and honest with them will they be able to put you forward for the right equity release loans for you and your current situation.

You should also speak to the team at Equity Release Warehouse who will be able to advise you on how to get approved for an equity release loan.

Please call our 24-Hour Helpline: 0330 058 1579

Speak to our team at Equity Release Warehouse

Equity Release Warehouse is on hand to provide you with all of the necessary and relevant information you need to make a decision about whether equity release is for you, and apply to a lender if that is what you want to do.

You can call our team directly by calling us on 0330 058 1579 or by filling in our online contact form.

On the call, it would be helpful to explain to us what it is you are hoping to get out of applying for an equity release loan, and explain to us what it is you hope to spend your equity release funds on.

It is normal for our advisers to ask these kinds of questions so that we can assess what type of plan you are most suited to.

At this stage, it is important to remain open and honest with our equity release advisers, so that we are able to gain a clear, transparent and accurate picture of your financial situation.

It is incredibly important to our team at Equity Release Warehouse that we present you with all of the relevant and necessary information and that we do not put any pressure on you to make a decision.

We will never chase you or push you into releasing equity from your home if it does not feel like the right decision for you.

If you decide that equity release is not for you, then let us know and we will advise you on what other options might be available to you.




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