This article is all about trying to get a Mortgage after you have been bankrupt. We receive phone calls and emails on this. Some people believe it is not possible – worryingly, that can even be after speaking to another broker or reading the internet!
So before we go any further, yes. It is possible to get a mortgage after being bankrupt. But we cant end the article here can we? Below we will go into looking at things like deposit, costs and other factors that will go into working out how successful an application will be.
How long have you been discharged?
This is probably the biggest question we need answering when we are looking at mortgages for people who have been bankrupt. This question determines the size of the deposit and will also help us determine the interest rates available. But the key thing is that most lenders go off the date of discharge rather than the date of registration of the bankruptcy.
Less than 12 months discharged
If you have been discharged for less than 1 year, your options are very limited. Off the top of my head, I can only think of 2-3 lenders who might consider you from day 1 of being discharged from the bankruptcy. The deposit would need to be around 40%. Rate wise in the current climate (January 2025) you are probably looking at around 8-9%. We tend to find unless the mortgage is relatively small not too many people want to proceed at this point. But if you take nothing else away from this section, there are potential options.
1 to 3 years discharged
Not a lot changes from the above. You are still looking at a very slim group of lenders. However once you hit the first anniversary you will have a couple of additional options. You may also find you can get away with a 35% deposit. Rate wise you are probably looking at similar to the above.
3 years to 6 years discharged
Right then, this is where things start to look a whole lot different and get a little more exciting (exciting and mortgages in the same sentence!).
Once you hit the third anniversary of being discharged we see a large swing in the market. All of a sudden we go to double digits for the lenders available. Very few of these are high street options so it is still not
5-6 years discharged
Some additonal notes
If the bankruptcy was for say a tax bill, it could be that there are no negative markers on your credit report. This will mean there is a better chance of obtaining high street rates.
If your bankruptcy involved defaults to several high street banks then the chances of high street lending is probably slim. So who was involved in the bankruptcy and how your credit report looks will alo play important factors.
Whether or not your home was repossessed as part of the bankruptcy is another big factor.
The last 2 factors that I think are important enough to affect your application is the reason for the bankruptcy and whether you have run up more debt since the bankruptcy.
However all of these things have different levels of importance and I always say the devil is in the detail. So to find out your chances of success, please do get in touch where we will be happy to have a 10-20 minute chat to work out if we can help and the likely rates we would be looking at.