Get a Mortgage after Bankruptcy
- 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. There are now lenders who will consider your application.
Normally High Street lenders will be unable to help. Even if your credit rating has started to improve they are still likely to consider you as too high a risk. As such they will probably reject your application.
You will therefore need to use an Adverse lender. The way to do this is by getting in touch with a specialist mortgage broker. They will be able to identify the best lender for your circumstances.
Please contact us and we will put you in touch with a Mortgage Broker who can help.
The interest you will be charged by an Adverse Lender will be greater than if you had not been bankrupt. However it may not as bad as you might think. Some lenders are offering rates of 6%-7% over base.
What size Deposit will you need?
Generally speaking the main restriction 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 immediately after 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.
Waiting to get a mortgage after bankruptcy is not necessarily a bad thing. The longer you wait the more money you will be able to save towards your deposit and the better deal you are likely to get.
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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