Bankruptcy is a legal proceeding that involves a person (or business) being unable to repay their outstanding debts. You can either ask to be made bankrupt, or someone that you owe money to can ask a court to make you bankrupt (although they can only do this if you owe at least £5,000).
Bankruptcy can sometimes be the best option for someone, as it relieves them of all the debts that they owe. They are allowed to keep certain items including everyday household items, items you need for your job and a car for work purposes as long as it is valued below £2,000. You can keep an amount of your income too. However, being bankrupt can result in your house being repossessed if you own it, your possessions being sold if they are not ‘exempt goods’, if you own a business it may be shut down and it will, of course, have a negative impact on your credit score. This could therefore jepordise your chances of getting a mortgage.
Can you still get a mortgage if you are bankrupt and if not, what can you do?
Unfortunately, if you are bankrupt you cannot get a mortgage. However, despite what people commonly believe, you can still successfully get a mortgage after being declared bankrupt in the past. Many lenders will refuse outright, but there is a small selection of both high street and specialist lenders who are willing to consider those who’ve been discharged from bankruptcy.
Like with most adverse cases, the older the bankruptcy the more likely lenders will consider you. Certain aspects in addition to time period will increase your chances, including the size of your deposit.
Generally, after one year of being discharged from bankruptcy you could possibly be accepted for a mortgage, although you will require a deposit of a minimum of around 40% of the mortgage. After two to three years this deposit requirement may reduce to 25% although, it depends entirely on the lender and your circumstances. Five to six years or more after discharge CAN allow you to get a 95% mortgage (deposit of 5%), but it must be noted there is no guarantee for this. The criteria can change at any time and regularly does, so you must be aware that you cannot be guaranteed a mortgage. The best thing to do in order to properly and efficiently evaluate your situation is speak to a mortgage adviser, as they can provide you with the best of their knowledge and do their upmost to help you find the right path to getting a mortgage.
For more information, or if you have recently been discharged from bankruptcy and would like to see what your options may be, then call us at View Finance today on 0333 320 8658 or email us at info@viewfinance.co.uk and our friendly, experienced advisers will be more than happy to evaluate your circumstances and do the best they can to help you find what you are looking for.
