The use of the words ‘bankruptcy‘ and ‘mortgage‘ in the same sentence is often associated with anxiety and financial trauma but here at Mortgage Success we aim to shed some light on mortgages after bankruptcy and how your options change as time moves forward.
Bad credit or adverse credit history doesn’t have to end your homeownership dream and there are more and more lenders offering a range of deals for prospective homeowners who’ve had CCJs, IVAs and also discharged bankruptcies.
When it comes to trying to obtain a Mortgage following bankruptcy most lenders tend to work off the date you were discharged.
Some lenders will work off the date you entered the bankruptcy however. So this can give you a few more options once you hit the 5 years discharged stage (assuming your bankruptcy was for 12 months).
Below we will go through your possible options based on how long you have been discharged.
*The information below assumes all other criteria fits and you have had no further adverse issues since being discharged from your bankruptcy.
Mortgage options if Discharged in 2020
If you were discharged from your bankruptcy in 2020, currently there is only really 1, possibly 2 lenders who will consider you.
Generally speaking you will need a 30% deposit as a minimum and would be looking at rates of around 6.5%.
As with any bad credit mortgage customer that uses a Bad Credit Specialist Broker such as ourselves, the worst rate you’ll get is the first one.
After you have had a year or two of mortgage payments and no further lapses on your credit history, more and more lenders will become available to you as the time between your bad credit (including being discharged from bankruptcy) grows.
Mortgage options for those Discharged in 2019
Once you have been discharged from your bankruptcy for 12 months plus similar to the above there is only really 2 lenders who may consider it. Deposit wise you are looking at around 25-30% and rates are still going to be over 6% in the current market.
What are my options if I was Discharged in 2018
At 2 years discharged, it is a bit of a complicated time. You are within 12 months of being potentially eligible for normal rates and with a normal deposit, but as things stand you are currently eligible for the products similar to the above of around 6% interest and still needing a large deposit of around 25%.
It is difficult to make the decision of remaining where you are or to take the hit on the higher interest rates knowing if you were to wait less than a year you would have far cheaper options on the horizon. This is one of those complicated periods where you need to weigh up what is currently available against what is potentially available around the corner and what you are paying now.
You may think, despite the rate it is no more expensive than renting and so it makes sense, you may decide to hold fire for 12 months, we are happy to talk through those options with you (without trying to push you down the mortgage route), ultimately it is a big decision to make and so we are happy to talk through the pros and cons and let you decide what is best for you, sometimes it just helps to talk your options through.
Increased Mortgage Options being Discharged from bankruptcy in 2017
Now we are talking! If you were discharged from your Bankruptcy in 2017 and looking at your Mortgage options, this is where things start to look a little brighter. There are a range of products available. If your credit report does not look too bad in terms of arrears or Defaults and CCJs, there is a good possibility we can start to look at normal rates for you.
Failing that we also have some smaller lenders who do not credit score but can review your case based on criteria instead scores – by that we are looking at 3 years discharged and no adverse issues in the meantime. We could potentially be looking at as little as a 5% deposit and/or rates of around 2%, which is much closer to the mainstream mortgages out there.
Mortgages after Bankruptcy. Options if Discharged in 2016
If you were discharged from Bankruptcy in 2016, very little changes between 3 years and 4 years discharged. There are 1 or 2 more lenders who will consider you but it is unlikely to mean improved rates, it does however mean more options though which is never a bad thing. There should also hopefully be a little more clear water between the credit issues and your Mortgage application and that should improve your chances of being accepted.
Discharged from bankruptcy in 2015, what are you Mortgage Options
Being discharged in 2015 means you are potentially at the stage of being discharged for 5 years, this is another big milestone stage in the whole bankruptcy process and the mortgages after bankruptcy on offer to you here are plentiful.
Although generally speaking most lenders want 6 years clear from discharge of the bankruptcy, there are a few lenders who will look at 6 years from registration. As most bankruptcies now a days run for 12 months, this is the time where you would notice a significant increase in options.
It is still unlikely to be for all lenders and you are also not likely to notice any significant drop in rates but as we are already in the territory of normal rates, this is where you will start to see you have a little more choice.
By choice we are looking beyond rates and fees, you may not be eligible for the best buys, but we should be looking at normal rates so no major issues there. We can start thinking about what you want from your mortgage rather than being stuck with a handful or so of options. Do you want the cheapest lender? Do you want a quick lender? An easy lender? These are all things that we can start to discuss. We also have more flexibility, do we need to use second job incomes, benefit income etc. So this is where your options become much more in line with what is out there for mainstream market.
Mortgages after Bankruptcy. Options if Discharged in 2014
Being discharged from Bankruptcy in 2014 means we are in and around the 6 years discharge period and the mortgages after bankruptcy on offer to you now are (all things being equal) are on a par with having no bad credit.
This is the point where on paper at least you have 99% of lenders available to you.
There are a few lenders who will not accept ex bankrupts ever, but those lenders are few and far between and in all honesty you are probably not going to miss those Mortgage lenders anyway.
This is the point where we can start looking at the Best buys etc. The exception to that could be dependent on which companies were involved in your bankruptcy. As an example, there is a Mortgage lender out there who will never accept you if they have had to write off as little as 1 penny. Beyond the 6 years some lenders still keep internal records which can go back much further.
An example of how it can work…
I think the one thing that is worth pointing out is that the rates mentioned above, are ball park figures just to help you decide whether it is worth looking in to further but more importantly they are typically for a 2 year deal.
Lets assume you have been discharged for 12 months from your bankruptcy and you take out a Mortgage today at 6% for 2 years, at the end of that deal you have 3 years discharged. You then fall in to the 3 years discharged category and so we can start to look at the improved rates. As you will also have 2 years worth of mortgage payments on your credit file, that can also help with future applications as you then not only have 3 years clear but also 2 years evidence of mortgage payments – assuming your mortgage and other commitments have been paid on time in the interim.
How can we help?
We do a lot of Mortgages for ex bankrupts so we are best placed to give you the latest information and advice about getting mortgages after bankruptcy.
From experience we know the best bad credit mortgage lenders and which lenders are open to bankruptcy at the various anniversaries, that can change periodically depending on the lenders appetite at the time, fitting criteria is just part of the research process, we also want to make sure you are likely to be accepted.
We generally advise you obtain a copy of your discharge letter or certificate as early in the process as you can. If you do not have a copy it can take a couple of weeks to obtain so best to get it ordered as soon as possible so as to avoid any delays.
Please do get in touch, we would love to talk through your circumstances and see if we can help get you offers of mortgages after bankruptcy or help you to plan your next steps, if you havent been discharged long.