It is well known that your credit score determines your eligibility for new loans and credit cards. Unfaltering loan repayment and a low debt to income ratio play a crucial role in keeping your score healthy. But many times, you want to borrow more than a financial institution finds you eligible for. From burden of accumulated liability to unplanned expenses, there are too many challenges you need timely funds for.

Indeed, most of the households in the UK have more than a couple of cards and primary loans to support every month from their income. To name a few, primary loans such as mortgage, auto loan, and student are the inseparable part of modern lifestyle. Now if you want to raise more loans after exhausting your credit limit, how should you go about it? Is it even practical to go for an additional loan with bad credit?

After all, bad credit loans come at a higher cost and why should one burn the pocket when one is already undergoing a difficult financial phase in one’s life. Let’s seek out answers to many such pressing questions below.

Calculating homeowner’s credit worth

One of the common mistakes while calculating your credit worth is ignoring your real worth. Rather than making a hole in your pocket with bad credit payday loans or another high cost no collateral loans, you can consider using a second charge on your home.

Well, despite the running mortgage on your residential property you can use the balance home equity to raise a required loan at a better price. It would not only help you borrow more with bad credit situation but would also help you get the deal at a low-interest rate.

Let’s take an example to understand this:

Suppose you own a home worth £300,000 and your current mortgage balance is £160,000. This means you have £140,000 home equity balance with you. You can use the balance of home equity to raise a long-term loan for debt consolidation or home improvement. The loan amount could be as high 75% to 89% LPV to £140,000. But raising a loan against property proposes a risk of losing the ownership in case of non-payment. However, the proposal would save you enough on the loan interest. Thus, with a little planning, you can take a second chance and improve your credit situation.

The rate of the loan would be determined considering the balance of home equity only. However, those who do not want to avail a loan against property can use the title of the home to avail even an unsecured loan for homeowners.

Being a homeowner with equity your loan application is considered worthier than tenants or those who do not own a home. Whether you seek a loan to fund a boiler purchase or to renovate your home, kitchen or bathroom, you can use a broking service online to search for reliable lenders extending loans to homeowners in the UK. Being a homeowner, you would be offered a better rate with better terms. Thus, rather than undermining your credit worth, you should use your real credit worth to apply for a loan.