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Mortgage after Bankruptcy

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Can I get a Mortgage after Bankruptcy?

There are many factors that lenders will consider when assessing an application after a bankruptcy – such as the amount of equity and deposit, when the bankruptcy was declared and discharged, and your credit use in the intervening time. There are some lenders who will offer a mortgage after a bankruptcy – each will look at your finances as a whole, but equally each will have their own criteria to meet.

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Mortgages for Discharged Bankruptcies

The team of advisers at The Mortgage Centres has had a great deal of experience in advising customers with discharged bankruptcies on how to get a mortgage. It can be daunting and disheartening to have been declared bankrupt, and you may have deep concerns over the impact on your borrowing in future.

Many mainstream lenders do not have much flexibility in this regard and will turn down your application flat. However, we have access to mortgage lenders across the whole of the UK market, many of whom take a more understanding approach, and may even be able to offer a mortgage the first day after discharge. Be aware that, in order to qualify, you may need to find a larger deposit or have a sizeable amount of equity in your current home.

Why is it difficult to get a Mortgage when Bankrupt?

Lenders make decisions on whether to grant a mortgage application based on their perceived risk. When they assess a mortgage application, they will look into your credit history and credit score, as well as your current circumstances.

If a mortgage lender sees a notice of bankruptcy on your files, then they may think you will be too high a risk in future and decline your application. Some lenders are willing to consider mortgages for people with a record of bankruptcy, and other adverse credit events, but even they may still place restrictions on the level of borrowing and impose higher deposits and interest rates.

On a positive note, following a discharge from bankruptcy, usually after twelve months, it is possible to obtain a mortgage again, although it will still have an effect on your options.

Information on Mortgages after Bankruptcy

Getting a Mortgage after Bankruptcy

Many lenders, particularly those on the high street, will simply decline an applicant with a history of bankruptcy, and many people who have been declared bankrupt in the past are understandably concerned over their options for obtaining a mortgage. But there is still a fair amount of choice on the market.

The biggest factor to influence a lender’s decision will be the date of the bankruptcy, with the longer amount of time since it occurred, the better. As we write, after six years have passed nearly all lenders will consider a mortgage application, and there is still a decent amount of choice available after three years. It becomes more difficult if it has been just twelve months since the bankruptcy was discharged, but there are some lenders who are prepared to offer a mortgage on the first day – although you may need to find a larger deposit, accept higher interest rates and have taken steps to rebuild your credit score.

How soon after Bankruptcy can I get a Mortgage?

Some lenders – particularly high street providers – will reject a mortgage application straight away if there is any history of bankruptcy, no matter how long it has been or how the applicant’s circumstances have changed. However, this certainly does not apply to the whole market, and nearly all lenders will consider applicants after six years since discharge. The table below gives you an idea of the minimum deposit or amount of equity required compared to the amount of time that has elapsed (correct at the time of writing).

6 years 5% deposit
4-5 years 10%, or possibly 5%
3-4 years 15%, or possibly 5%
2-3 years 15%
1-2 years 25%
Day one 50%

Can I Remortgage after Bankruptcy?

Similarly, to finding a normal mortgage, the same criteria will apply when looking to remortgage your current property. While you are still within a bankruptcy period, it is extremely unlikely that a lender will consider you for a remortgage, and you will probably find that borrowing restrictions form part of your bankruptcy order.

After your bankruptcy is discharged, it is possible to remortgage, but your options could be restricted according to a few factors. At the time of writing, there are certain lenders who will confirm a mortgage on the first day after discharge, but you’ll need to put down a large deposit or already have a lot of equity tied up in your current property, and the lender will have strict criteria for approval.

Your options will become much better once twelve months have passed since your bankruptcy was discharged, and improve further the more time elapses, with typical high street rates and levels of deposit achievable after 3-4 years.

Best Mortgage Lenders for Discharged Bankrupts

We get many customers with a discharged bankruptcy asking us who we think are the best mortgage lenders for someone with their financial history. This might sound like a simple question, but there is no simple answer.

The best lender for any one particular customer will be the one who can provide a mortgage that will suit their particular needs, at that particular time, for which they will meet the assessment criteria, which may also vary according to how personalised the application process is.

To make an informed, sympathetic decision, many factors need to be taken into consideration, including a client’s complete financial past and current circumstances. Specifically in cases of bankruptcy, they will place more weight on how long it has been since it was discharged, as well as the level of deposit or equity available.

Need advice on who to approach for a mortgage after bankruptcy? Please get in touch with us today and we will do all we can to help.

Can I Remortgage to pay off my Bankruptcy?

There are many reasons why you may find yourself in a position of bankruptcy, and in some cases the best thing to do is to find a way to repay your bankruptcy and bankruptcy expenses, and in turn get it cancelled. In legal terms, this is an annulment, and will put you back in the same position financially as you were before the court registered your bankruptcy.

While serving a bankruptcy period, you are likely to have restrictions placed on your borrowing, and so will be highly unlikely to be able to get a new mortgage on your property using a standard mortgage provider. However, we may be able to access options available through specialist second charge lenders, and if successful, this arrangement could improve your credit rating, therefore enabling you to transfer to a normal mortgage in the future, if this is the best thing for your circumstances.

This course of action can work well for many people, and appear simple, but we highly recommend you talk to a mortgage expert before taking action.

Specialist Mortgage Brokers

If your credit history and reports contain adverse credit events, such as a bankruptcy, you are likely to need the help of a specialist mortgage broker if you want to apply for a so-called ‘bad credit mortgage’ with lenders offering deals you wouldn’t normally find on the high street.

A specialist mortgage lender is focused on one area of the mortgage market, and knows the providers, the deals and the options inside out, often having good relationships with lenders across the board.

Dealing with a specialist means you can feel safe in their knowledge and expertise, and confident that they are best placed to help match you with the provider and mortgage product that will suit your needs.

Our team at The Mortgage Centres is comprised of several specialists, each an expert in their chosen field, who are able to support each other should a client’s case require knowledge of more than one area of the mortgage market. You’ll have all the experience and expertise you need, all under one roof.

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