Published 7 November 2012 · Older article
I am a discharged bankrupt what are my realistic chances of getting a mortgage?
We receive a constant and high level of enquiries from ex-bankrupts looking to obtain a mortgage.
In this article I will give you guidance on what you need to get a mortgage after bankruptcy. As we specialise in getting finance for people who have had credit problems we can speak on this topic with authority. We therefore expect this mortgage bankruptcy guide will save you valuable research time.
How long do I need to wait after my bankruptcy discharge before I can apply for a mortgage?
It depends on the lender. Some will consider an application relatively soon after discharge, while others want several years to have passed.
I’m a discharged bankrupt – will my interest rate be higher than the norm?
Rates are usually higher than normal if the bankruptcy discharge was recent. Some products have light or no early repayment charges, which can make it easier to remortgage onto conventional terms later.
Does my reason for going bankrupt affect my mortgage chances?
The reason why you filed for bankruptcy is pivotal in your mortgage eligibility. It is vitally important to portray a sensible rationale for why you became bankrupt and that you can demonstrate that this was an isolated occurrence. The lender will need to be assured that ordinarily you are ‘on top’ of your finances and can service debt. For example, the bankruptcy could be attributed to major incident in your life e.g. messy divorce, business going under, unexpected tax bill or long-term illness. If however, the reason was you amassed loan-upon-loan without contributing, just hopping to the next fix, then the chances are the mortgage lender will take a dim view.
Is my credit conduct important since my bankruptcy?
In short ‘yes’. If you have adverse credit that post-dates your discharge then it is highly likely that it is a ‘straight mortgage decline’. From the lender’s point of view it demonstrates the opposite of what they are looking for and they will conclude that you are financially irresponsible.
Does job stability improve my chances of getting a mortgage after bankruptcy?
Absolutely, particularly if it was not connected to the reason for bankruptcy e.g. failed business and started up again in the same basis.
How much deposit would I need to get a bankrupt’s mortgage?
This is probably the area of most misinformation on the net. The deposit needed depends on the lender and on how long ago you were discharged: the more recent the discharge, the larger the deposit lenders usually want.
If you cannot provide a large enough deposit, it may be worth waiting and saving before you apply.
I would also add ‘regular savings’ is much more palatable to a mortgage underwriter. Gifts from immediate family can be considered but are viewed less favourably.
How much can I borrow?
It depends on the lender, your income and how long ago you were discharged; a more recent discharge usually means lenders will lend a lower multiple of your income.
Why do I need to use Niche Advice to get a bankruptcy mortgage?
In short ‘you don’t’. This can however be a minefield. One wrong statement to a lender can result in a decline. And, when you are talking about a small amount of active lenders in the bankruptcy space you can run out of options pretty quickly.
We have experience of bankruptcy mortgage placements and importantly the relationships with the decision makers. If you think you can do it yourself good luck, and I hope that my article has helped in some way, but you will have a long bumpy road ahead.
How much do you charge to obtain a mortgage after bankruptcy?
I believe in being transparent with all of our clients. Let’s be honest if you have been through a bankruptcy you are likely to have been to hell and back and on the way have swam with a lot of sharks.
I charge 1.5% of the loan size. Which I believe wholeheartedly to be representative of the additional work involved with mortgage cases of this complexity. Furthermore, I’m so confident of my ability to deliver that this is only payable once the mortgage has been successful and the funds released.
There are no upfront charges whatsoever. This means you only pay us when you have actually bought your property and the solicitor has told you that the deal has completed.
As mentioned before we have lots and lots of enquiries a day from ex bankrupts wanting to get a mortgage and the temptation would be to charge an admin fee upfront knowing that the case will not go anywhere, and we would make quiet a lot of money without doing anything. But I’m not here for a fast buck, I want to help, graft, and I’m prepared to be paid on positive results.
My strong preference would be that you use our solicitors who are accustomed to bankruptcy mortgages. That way, I can keep control of the whole spectrum of the case, prioritise, and have direct input where necessary.
So there you are…you should now have all the facts about getting a mortgage after filing for bankruptcy.
(Please make sure you also have an up-to-date credit report ready to share with us when you get in touch. Check your credit report. For an overview of adverse credit, see our main bad credit mortgage guide.)