For specialist mortgage guidance, please contact us directly.

Mortgage after Bankruptcy

Can I apply for a mortgage after bankruptcy?

Yes, a mortgage after bankruptcy is possible, and New Start Financial Services can help.

Even though the “sub-prime” mortgage sector almost closed following the financial crisis in 2007-08, it is now again possible to find a lender if you were previously bankrupt even as recently as a day ago. There are specialist lenders that in the right circumstances and with the required deposit will consider your application.

Insolvency Law means that you will not be able to obtain a mortgage until you are discharged, but once finalised you are free to apply, though obtaining a mortgage after bankruptcy has a lot to do with time passed. Normally bankruptcy in the United Kingdom lasts for 12 months but the bankruptcy information remains on the public register indefinitely and many high street lenders may consider you an unacceptable risk regardless of how long you have been discharged.
Generally, the rates will be more expensive and you will need a larger deposit.

The general rule is that the longer you have been discharged, the rates offered to you will be lower and deposit requirement potentially reduced. There are High Street Lenders who will consider lending to you once you have been discharged for six years and some potentially three years.

What to do after bankruptcy? Do check your credit report and make sure that all creditors are showing as complete to match the date of your bankruptcy. If you can, do keep your current account open and ensure it runs smoothly.

Deposit required when applying for mortgage after bankruptcy.

Typically, the deposit depends on how long ago you were discharged and what still appears on your credit profile. In some circumstances, if you have been discharged over 3 years and currently have a good credit history, you may be able to borrow up to 90/95% LTV. On the other hand, if you were recently discharged, you will find it much harder – although some specialist lenders may be willing to accept your mortgage application if you have typically a 25% deposit. Please note that this is just general criteria, not a guarantee of getting a mortgage though we will be able to assess your situation and advise you of what is possible.

Why use a specialised broker?

Sub-prime mortgages are mortgages for borrowers that don’t fit standard criteria and need a little more help in finding the right solution. Prior to 2008 severe adverse credit and less severe problems were mainly catered for by specialist lenders. Following the credit crunch, specialist lenders almost disappeared from the market and High Street Lenders appetite for risk reduced, so for a number of years applicants with special needs really had no options.

Whilst the High Street stays firmly in the camp of credit score lending there are a number of specialist or niche lenders who actively want to lend to clients with failed credit score and borrowers with minor problem or ‘near prime’. Similarly, there are specialist lenders catering for clients with more severe problems such as having defaults, CCJ’s, pay day loans, missed payments, debt management schemes and bankruptcies.

A good specialist brokers can help you find the right, most suitable solution, for you based on your circumstances. If your credit score is damaged, they can help you to find a lender who is willing to consider your application, even if you have been declined by a high street lender. A good broker will have an in-depth knowledge of the market and they will be able to recommend the most suitable mortgage for you minimising the risk of your application getting rejected.

As a limited company director most lenders will assess on your salary and dividend income, again normally an average of the last two years, though again some lenders will assess on the latest year. Some lenders though will assess on salary and net profit which is useful if you retain profits in your company and do not draw out all of your possible income.

Stuart Dibley Specialist
Mortgage Adviser

To find out exactly what you're eligible for and at what rates please give me a call on 03456 123835 or fill out a quick enquiry form here.