Insolvency in the UK can fall in to a couple of different categories depending on your situation (how much is owed, whether or not you are a homeowner, whether or not you are able to make payments) and where you live. In England & Wales there are 3 types of Insolvency:
|England & Wales||Scotland|
Northern Ireland has its own versions I believe but as we do not get much demand from NI applicants, it is not a market we know.
Some Insolvency statistics…
According to the Insolvency Service, there were 25,151 individual insolvencies in the third quarter of 2018, 55.8% of those were IVAs (approximately 14,000), 27.7% were Debt Relief Orders (approximately 7,000) and 16.5% were bankruptcies (approximately 4,150). If you multiply that up over the year, you are looking at around 100,000 a year going insolvent so you can see you really are not alone.
It is a significant part of the mortgage market and Mortgage lenders are open to helping applicants who have been insolvent to varying degrees.
The aim of this post is to look at the different types and how they are viewed by Mortgage Lenders.
Getting a Mortgage after Bankruptcy
Lenders will typically underwrite Bankruptcy in 2 different ways. The first is lenders base their criteria on When you went Bankrupt and the other (more common way) is lenders base their criteria on when you were discharged from the Bankruptcy.
The other thing that can vary is the time lenders need, typically most lenders will want you to have been discharged for 6 years, however there are lenders will say 6 years from registration, we also have lenders who only need you to have been Discharged for 1 day and more or less everything in between. I think the key thing is that if you are looking for “normal rates” or have a deposit of less than 15%, then you are really looking at a minimum of 3 years discharged.
Getting a Mortgage after an IVA
An IVA in the vast majority of cases is treated the same as Bankruptcy. However, where it can vary is that there is a lender with some products we have access to who can be used whilst in the IVA. This can only generally be used where the mortgage will be less than the rent if a purchase or if remortgaging it can only really be used to do a straight remortgage (with no additional borrowing) or if raising additional money, then it would need to be used to pay off the IVA.
Getting a Mortgage after a DRO
A Debt Relief Order (DRO) is less common than the other 2. Although they are generally for smaller amounts than an IVA or Bankruptcy, they are treated the same as an IVA from a Mortgage lenders perspective.
How can we help?
As Mortgage Brokers who specialise in Bankruptcy, IVAs and Insolvency we are sure we can help. With have good relationships with the lenders and in some cases we have access to products that are not only available through Mortgage Brokers but in certain cases only selected Mortgage Brokers who specialise in the adverse part of the market.
We know the lenders, we have products that not everyone has access to but more importantly, we know how these lenders work. We know their quirks and their requirements, we can package up your case in a way that helps to speed up the process of getting your offer issued.
We have some examples on our Mortgage Success Stories page of where we have been able to help people who have been Insolvent however here are the direct links to 2 stories.
- Bankruptcy & IVA Success Story – This was a great example of where both customers had been in an IVA and then gone bankrupt where we managed to help them with a 10% deposit.
- IVA Success Story – Here is an example of a customer we had been able to help after completing their IVA 3 years prior.
As always, we can only provide so much information on a blog post. If you are looking at getting a mortgage and unsure whether you can or not, please do get in touch. We can discuss your circumstances in detail and give you an answer based on your position rather than generically.