5 ways to get a home loan despite bad credit

Let’s be honest. Having a bad credit score will probably get you nowhere, as most people will find it difficult to trust you and lend you money. Contrary to popular belief, there are more ways to acquire a loan without having to be turned down by banks and other financial institutions. That’s how.

1. Get closer to credit unions

Unlike commercial banks, a credit union is a non-profit institution. Its functions are similar to those of commercial banks in terms of the services offered, but it is owned by the union members and not by for-profit shareholders. Credit unions make loans based on your character and your promise to pay. Bad credit takes a back seat.

2. Get help from loved ones

Your relationship with your family and friends can easily become stale if you borrow money from them and do not repay the money on time. However, when you have no other choice, this is your best option. Borrow from your family or friends. But treat this loan as a major business transaction. Make sure to repay the loan in the stipulated time.

3. Ask someone with a good credit score to back you up.

If borrowing money from loved ones and close ones is not an option for you, find a co-signer with a good credit history and be confident in your ability to repay the loan. You and your co-signer can approach a traditional lender together, who will then be willing to make the loan based on your co-signer’s credit rating.

4. Take advantage of loans against the property

A home equity loan allows you to borrow money using your home equity to its fullest potential. In what is also called a second mortgage, the entire loan amount is disbursed at one time. Such a loan can be obtained regardless of having bad credit. Low interest rates apply and the interest paid is usually tax deductible.

If you choose this method, you should know that your property is at stake. The inability to repay the loan will mean that you may lose your property to the bank. However, this is a great way to borrow money if you are diligently complying with the terms and conditions of the loan and have a steady income.

5. Go online for loans

Peer-to-peer lending is a fairly new concept that started around 2005. With this platform, you can borrow directly from other people instead of going to an institution. Potential borrowers can post their loan requirements on online forums and more and wait for a lender to contact you.

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