If you are looking for a bankruptcy mortgage after 2 years of being discharged, and have a 25% deposit then look no further.
Niche Advice is delighted to provide access to ‘exclusive’ funds from a building society for bankrupts who have only been discharged 2 years. This exceptionally priced bankruptcy mortgage product is in limited supply so do not delay otherwise it is likely to be fully subscribed.
Qualification criteria for the ‘Exclusive’ Bankruptcy Mortgage
- Houses in England and Wales only.
- No adverse credit or missed payments since the bankruptcy.
- No repossession(s).
- Standard income multiple: 3.5 times single or 3 times joint.
- Minimum deposit or equity 25%.
- Minimum of 6 months in current job if employed.
- Minimum of 2 year’s accounts if self employed.
- Well conducted current account for the last 6 months.
Example of current ‘Exclusive; Bankruptcy Mortgage After 2 Years
Based on a purchase price of £200,000 and a repayment mortgage of £150,000 over 25 years.
There is a money transfer fee of £25 and a mortgage discharge of £150 on full redemption. The main early repayment charges are 2% of the original loan repaid in the first 2 years.
The 75% ‘Exclusive’ Bankruptcy Mortgage rates are current as at 17 October 2013:
- 2 Year Discount
Initial pay rate 4.89% (APR 5.9)
Valuation Fee £194 / Arrangement fee £3,000
Currently at £867.30 per month for 2 years. After this period the mortgage will revert to the lender’s variable rate at the time. Based on today’s prices this would be £925.32 per month.
A truly amazing rate given the level of risk the lender is taking on.
If you earn in excess of £40,000 the income multiple is likely to be extended to 4 times the first applicant plus 1.25 times the second applicant’s salary (3.75 times joint if higher). This is a sensible approach which rewards those expected to have a higher deposable income.
It is funded by a building society who generally have a much better reputation than centralised lenders.
The early repayment charge period allows you to reassess your options in two year’s time when the bankruptcy is more historic without being unduly penalised.
This is aimed at the rehabilitated applicant(s) who has an unblemished credit record since the bankruptcy and is now on good earnings.
The Bankruptcy itself must be a ‘one off event’ triggered by an exceptional event such as divorce, redundancy etc. It cannot have included a repossession within the proceedings.
Flats of exceptional quality can be considered but ordinarily the product is limited to houses.
The arrangement fee is sizable for residential mortgages but that said it can be added to the loan within the 75% maximum loan to value.
The early repayment charge within the 2 year discount period is based on the original loan rather than the current mortgage balance, which if it is a repayment mortgage is likely to lower.
The product is not portable to another property if you move.
To find our more on this and other Bankruptcy mortgages please complete our Contact Form to the right of this article.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.