For some, bankruptcy is like a shadowy spectre, whispered about in corridors. It is to be feared and avoided. ‘Don’t let the bankruptcy ghost get you – you will never get credit again,’ the whispers say.
Of course, that’s not the case, and bankruptcy (though serious) is little more than a temporary condition in the long life of your credit history. While it can cause you problems when it comes to obtaining a mortgage after bankruptcy, there’s plenty that can be done to ensure a successful application.
High street banks and other lenders may turn away someone who has previously been bankrupt without a second thought, especially if the discharge from bankruptcy is recent - but with help from The Mortgage Hut, a specialised lender can be found who will take more care to properly consider the application and make a more informed decision.
Mortgages for Discharged Bankrupts – What You Need to Know
Getting a mortgage if you have been bankrupt
Using The Mortgage Hut for help
Time: the great healer
Bankruptcy is a tool to clear a debts and credit issues from your file and allow you to begin anew. It would be a poor tool if it left you in a position where future loans were denied to you.
However, your credit report needs time to heal. Your official discharge from bankruptcy is typically a year later, but the report will hold onto the details for a further six years.
If you have the patience, then you can simply wait for those years to pass – and you won’t even have to wait the full six, as more lenders will be willing to look at your application for each year that goes past – by the fourth or fifth year, you will probably be considered as viable a borrower as anyone else.
Needing to buy a property sooner however, requires some effort.
Improving your credit score
The first thing that you must do is keep a clean credit record following your discharge. Something as small as a missed payment will be enough to raise concerns among lenders and a CCJ or other serious credit issue on your record after the date of the bankruptcy will be a considerable setback.
Remember, the bankruptcy will mark a clean end to any poor credit that existed before it, so you don’t have to take account of any of it, but post-bankruptcy credit interactions should all be very positive.
Over time your credit score will grow through care and attention.
However, your credit report needs time to heal. Your official discharge from bankruptcy is typically a year later, but the report will hold onto the details for a further six years.
If you have the patience, then you can simply wait for those years to pass – and you won’t even have to wait the full six, as more lenders will be willing to look at your application for each year that goes past – by the fourth or fifth year, you will probably be considered as viable a borrower as anyone else.
Needing to buy a property sooner however, requires some effort.
Improving your credit score
The first thing that you must do is keep a clean credit record following your discharge. Something as small as a missed payment will be enough to raise concerns among lenders and a CCJ or other serious credit issue on your record after the date of the bankruptcy will be a considerable setback.
Remember, the bankruptcy will mark a clean end to any poor credit that existed before it, so you don’t have to take account of any of it, but post-bankruptcy credit interactions should all be very positive.
Over time your credit score will grow through care and attention.
Deposits for discharged bankrupts
Preparing for a mortgage application
The months running up to your mortgage application are very important. You will need to show a clear ability to make the mortgage repayments – something that is seen by lenders as your affordability score.
Affordability is a measure of your free cash at the end of a month, once all your regular outgoings have been paid. If you are living close to the line, desperate for the next pay day to roll around, then your affordability is low.
Strong affordability (which will show if you have been saving significantly for a deposit) is very important in order to obtain the mortgage.
You should also take a proactive role in analysing and improving your credit score. The three main credit reference agencies (Experian, TransUnion and Equifax) all have online portals for viewing your rating and tracking the changes. Use these to make sure there are no nasty surprises coming once you make your application.
Make sure you make no applications for other credit (such as a credit card or overdraft) during the run up to your mortgage application as these will have an adverse affect on your report.
Speaking to The Mortgage Hut
Remember that we are here to help you throughout the process, but especially once you reach the stage of wanting to make an application! We will work with you to find a suitable lender, obtain an agreement in principle that will help you know that there’s a lender on your side able to work with your bankruptcy in mind, and work with you throughout a final application to give you the best possible chance of acceptance.
Affordability is a measure of your free cash at the end of a month, once all your regular outgoings have been paid. If you are living close to the line, desperate for the next pay day to roll around, then your affordability is low.
Strong affordability (which will show if you have been saving significantly for a deposit) is very important in order to obtain the mortgage.
You should also take a proactive role in analysing and improving your credit score. The three main credit reference agencies (Experian, TransUnion and Equifax) all have online portals for viewing your rating and tracking the changes. Use these to make sure there are no nasty surprises coming once you make your application.
Make sure you make no applications for other credit (such as a credit card or overdraft) during the run up to your mortgage application as these will have an adverse affect on your report.
Speaking to The Mortgage Hut
Remember that we are here to help you throughout the process, but especially once you reach the stage of wanting to make an application! We will work with you to find a suitable lender, obtain an agreement in principle that will help you know that there’s a lender on your side able to work with your bankruptcy in mind, and work with you throughout a final application to give you the best possible chance of acceptance.
Buy-to-let mortgages after bankruptcy
Mortgages after bankruptcy – summary list
Help and advice from The Mortgage Hut
At The Mortgage Hut we have a team dedicated to bad credit applicants and those affected by poor credit history. Our specialists have built up close relationships with lenders to be able to offer the finest quality advice and match your need up with a mortgage provider that will give your application the credit it deserves. Why not fill in our contact form or call us today to find out more?
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