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Applying for A Mortgage After BankruptcyBankruptcy is a stressful experience, and those who have gone through the process may worry that they’ll never be able to own their own home. At A Mortgage 4 You, we’ve helped many clients get a mortgage after bankruptcy, and you can usually apply once it has been discharged (generally after 12 months). While many major lenders will turn down previously bankrupt applicants, as a broker we have access to a much wider range of mortgage products, and can help match you to the right lender.
When can I apply for a Mortgage?
The terms of most bankruptcies mean that you can’t apply for any type of credit until it is discharged. In general, most bankruptcies are discharged after 12 months, but you’ll need to check the terms of the court’s decision. If your bankruptcy has only just been discharged, then you will struggle to find a mortgage lender right away. Unless you have a large deposit, a high salary, and are willing to pay extra for fees, then getting a mortgage after one year isn’t usually possible. Before getting accepted for a mortgage, you’ll need to show potential lenders that your finances are now in order, and that you can cope with the regular repayments. Building up a couple of years of good credit by making payments on time and living within your means will give your mortgage application a better chance of being accepted. The more time you wait and build up your credit rating after a bankruptcy, the more potential lenders there will be, and better rates will start to become available.
Post-bankruptcy mortgage lenders
If your bankruptcy was discharged less than three years ago, then your best chance of success is applying to a specialist lender. However, as you’ll still be seen as a risk, you should be prepared to pay more in fees and interest rates. The good news is that three years after your bankruptcy has been discharged, you’ll often find more mainstream lenders who are able to offer you a mortgage. Each lender has its own criteria, and A Mortgage 4 You will be able to advise which product will be best for your needs. With each year following the third anniversary after discharge we will have access to more lenders, and more flexibility on the size of the deposit required by the lender, and more competitive terms.
Six years after your bankruptcy has been discharged, it’ll no longer appear on your credit report, and if you’re in good standing with your creditors, then you’ll see your credit rating improve. Unfortunately, some clients who have previously been bankrupt will be initially accepted, then turned down just as they are about to finalise the process. This is because lenders have checked the hunters report, which is a registry of everyone in the UK who has been made bankrupt. This is one of the reasons why using a mortgage broker is important after bankruptcy. We have access to a greater number of lenders, including mortgages that can only be found via brokers. Therefore, if you are turned down by a lender because of the Hunters report, we can find another product to suit your needs.
Buy to Let
If you’re looking to invest in property, then you may be able to get a buy to let mortgage after bankruptcy, but it can be tricky. The brokers at A Mortgage 4 You will be able to give you an idea of how realistic your chances are of being accepted. Those who are looking to buy to let after being made bankrupt will usually need to have been discharged over three years ago. In the meantime, you’ll need to have a good credit record, and currently own one or more properties. Generally, buy to let lenders will ask for a 25% deposit, and will want to see that you have a decent income from employment, self-employment, or your pension. If you want to apply for a mortgage after bankruptcy, then speak to one of our experts today, and we can offer you a wider choice of options.May 2016 Bad Credit Mortgage News
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