Get a Mortgage after Bankruptcy
It is possible to get a mortgage after Bankruptcy. The amount you can borrow will depend on how long it is since your Bankruptcy started and the deposit you have available.
Jump to article content:
- How to get a Mortgage after Bankruptcy
- What size deposit will you need?
- Should you avoid Bankruptcy if you want to get a Mortgage
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How to get a Mortgage after Bankruptcy
During the Credit Crunch (2009-13) everyone found it more difficult to get a mortgage. If you had been bankrupt it was almost impossible. However things have changed and there are now lenders who will consider you.
Your options will depend on how long ago it was that you went bankrupt. If it is less than 6 years since the start date the record will still show on your credit file. The only mortgage lenders who will consider you at this time are so called Adverse Lenders who will charge high rates of interest (7-9% is not uncommon).
If you wait until after 6 years from the start date of your bankruptcy the record will have come off your credit file. As a result there may be high street lenders who will consider you at standard interest rates of between 2-3%
Even after the record of bankruptcy has come off your credit file many high street lenders will still be unable to help. You should contact a specialist mortgage broker who can identify the best lenders for you.
Contact us and we will put you in touch with a Specialist Mortgage Broker.
What size Deposit will you need?
One of the main restrictions to you getting a mortgage after bankruptcy is the size of deposit you can afford to put down. The longer you are prepared to wait the smaller amount you will need.
If you can offer a 50% deposit then you may be able to get a mortgage with an adverse lender as soon as you are discharged. 2-3 years from the start date of your Bankruptcy this drops to 30%. Between 3-6 years you will require 25%. After 6 years you may only need 5%.
In addition to your deposit the other factor you will have to take into account is the affordability of the mortgage you want to borrow. As a rule of thumb you will only be able to borrow up to 4 times your gross salary.
If you can it is best to wait for 6 years from the start date of your bankruptcy to apply for a mortgage. There may then be high street lenders who will consider you with a deposit of as little as 5%.
Should you avoid Bankruptcy if you want to get a Mortgage?
The fact that you have been bankrupt will not prevent you from getting a mortgage in the future. As such if you know this is what you will eventually want you do not need to avoid this debt solution.
You may wonder whether using an alternative option such as an IVA might make your chances of getting a mortgage easier. However this is not the case.
An IVA it is likely to last 5-6 years. As such you will have to wait at least this long before you can even start thinking about getting a mortgage. After this time it is likely that you would actually end up with the same deal as if you had gone bankrupt.
Getting a mortgage in the future should not be one of your main concerns if you are struggling with debt. You should focus on finding the solution that will best solve your problem and get you debt free in the best way possible.
Your home may be repossessed if you do not keep up repayments on your Mortgage or other loans secured against it.
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