Bad credit is a situation where the normal lending channels like the banks and other financial institutions do not entertain you for their loan products. The situation arises more out of your credit history and rating which in turn depends on the defaults happened on your previous loans.
However, having a bad credit is not the end of the road since the credit rating is only one of the several parameters constituting a loan offer. Depending on the other parameters many of the financial institutions offer you options for rescheduling the loan and one of the best ways of doing this is by using bad credit home loan.
Offering your house as collateral, as done in a bad credit home loan, neutralizes most of the disadvantages you have with your bad credit history. The lender gets the guarantee in terms of his charge on the immovable property and you have a much better chance of negotiating the terms with the lender which may not be possible in any other bad credit loan.
Once the lender realizes that his risk is reduced substantially because of the collateral security submitted, he will be able to give you better interest rates, repayment terms and easier duration and monthly payments on your bad credit home loan.
The proof in terms of monthly income is a must to show the lender that you have the wherewithal to make the monthly repayments. It will be much better if you are able to get a co-signor who acts as a guarantor for your loan. The inclusion of guarantor does add to the confidence of the lender and the process becomes easier.
You could also offer a down payment if the situation permits. Though most of the home loans do not require a down payment, mere offer from someone who has a checkered credit history will boost the confidence level of the lender with the result that the purse strings are further loosened.