Can I get mortgage after bankruptcy?

If your mortgage application has been declined because you have a bankruptcy on your credit record, it’s still possible to get what’s known as a Bad Credit Mortgage. These mortgages have been designed for people who have what’s known as an ‘adverse’ credit rating, which may have been affected because they have been declared bankrupt or been subject to an IVA or other court order in the past.

Adverse mortgage lenders specialise in creating mortgage products for people with less than perfect credit scores. They tend to have a greater appetite for risk than some of the more traditional high street banks and building societies but will price their products accordingly.

This means you’ll probably have to pay higher interest rates, come up with a larger deposit, or accept terms which are far more stringent than those offered with more conventional mortgage deals.

How does bankruptcy affect my mortgage prospects?

If your financial situation has spiralled out of control to the extent that you can no longer manage your debts, bankruptcy is one way of clearing your debts and making a fresh start. However, if you have been declared bankrupt, this can have serious consequences in terms of applying for credit, including mortgages, in the future.

Most mainstream lenders will not lend to people who have been declared bankrupt, even if their bankruptcy has been discharged or was several years in the past. A bankruptcy will lie on your credit record for six years after the date it was discharged.

There are some more specialist lenders, however, who will offer mortgages to people who have been made bankrupt. They will probably charge a higher rate of interest and but may also impose stricter eligibility requirements to protect themselves, which could include checking whether you’ve had a clean credit record since discharge.

Certain lenders have created specific products which balance the risk of them lending to someone with a bankruptcy on their record with the potential returns they can generate. The good news is, if you get a mortgage and start to meet your repayments on time and in full, you can start to build your credit rating, which could open up your eligibility to a greater range of mortgages when the time comes to re-mortgage.

The trick is finding a mortgage broker who can help you navigate this confusing marketplace to find you the right deal. That’s where My Mortgage Pro can help.

What is an ‘adverse’ credit mortgage?

Adverse credit mortgages are just like regular mortgages, but they have been designed specifically for people whose credit score has been impacted by bankruptcy, IVAs or other court judgements.
Because there is more risk involved in lending to someone with a bankruptcy on their record, specialist adverse lenders tend to offer higher interest rates and stricter limits on how much you can borrow.

That’s because the risk is mitigated by the higher interest rates and larger deposit you pay. If your credit score is high, lenders will view you as less of a risk and so your chances of getting a regular mortgage, with lower interest rates, approved are higher.
If your credit score is low, lenders will view you as riskier, meaning your options narrow. There are many types of adverse credit mortgages available, including fixed, variable, and discounted rates.

The interest rate you’ll pay, and the amount you’ll be able to borrow will vary from lender to lender and will depend on your credit score. 

How do I get a mortgage with a bankruptcy?

If you have a bankruptcy, the best rates and the number of mortgages available to you will be more limited. But, with the right support, you should still be able to find one that’s right for you.
If you have a bankruptcy, it will indicate to the lender that you have historically had debt problems and represent a higher risk to lend to.

You may also be subject to certain borrowing restrictions are imposed upon you during the bankruptcy period. The risk involved may be deemed too high by some lenders and they will turn down your application. Certain lenders have created products for borrowers who have either got an active bankruptcy or have been discharged. If you can demonstrate to the lender that you can afford the repayments and can manage your finances sensibly, you may still be able to access a mortgage, even with a bankruptcy on your record.

The application process and lending criteria vary between different lenders, so you may need help in navigating the marketplace to find the right lender. You’ll need to work with a mortgage broker with expertise in this field.

Contact us for more information about getting a mortgage with a bankruptcy

My Mortgage Pro is a professional mortgage information service. While we don’t give advice, we aim to provide you with simple, jargon-free, no-nonsense information about mortgages to help you make the right choice. We can also connect you with a specialist mortgage broker from our parent company James Alexander FS who are authorised and regulated by the Financial Conduct Authority, who will provide advice tailored to your specific circumstances and help you find the mortgage with a bankruptcy, fast.

To find out more and request a call, fill out the form below.