Can I Get a Mortgage After Bankruptcy?
It is possible to get a mortgage after bankruptcy, and there are lenders who specialise in providing mortgages for people who have either gone bankrupt or have bad credit. However most lenders will want you to wait for around two years following your bankruptcy discharge before you apply to them for a mortgage. It may be possible to get a mortgage sooner, depending on your circumstances, but generally it is not worth starting the application process for a least 18 months.
Any kind of credit that is offered to someone in a high-risk category is going to be on less favourable terms than regular finance that can be found on the high street. The same goes for mortgages following bankruptcy. The lending criteria are more in depth and you can expect to be asked to prove regular employment, regular income and access to liquid assets. You will find that a larger down payment will be required, and the interest rates will be higher than average. These kind of terms, while not great for the borrower, give the lender security on their outlay and minimise their exposure to risk. Asking for a large down payment means that you have made a substantial commitment to the property you are buying, and indicates to the lender that you are less likely to default on any payments, not only because you risk losing your property, but also because you risk losing a significant amount of money. It may well be the case that you don’t have the type of down payment that is being asked for, and while this may be disappointing it also has a plus side. It means you will have to wait longer while you save more money, which in turn means you are getting further away from your bankruptcy discharge date. It could well be the case that by the time you have saved enough to meet the deposit required by a bad credit lending specialist, you are actually able to apply for a regular mortgage. This would mean saving money on interest payments, and either having a much larger down payment than is normally asked for, meaning you are borrowing less therefore your repayments are smaller, or having some money left over to use for re-decorating or furnishing your new home.
It is during the waiting period between your bankruptcy discharge date and the time you can apply for a mortgage that you can do some good work on repairing your credit rating. Making sure you are prompt with any payments you need to make and perhaps applying for a low-limit credit card that you can use to build up a good payment history, will help bring your credit rating up, making you a much more attractive prospect to potential future creditors.
I write regularly about personal finance and tips on getting a mortgage after bankruptcy is one of my specialist subjects, with a particular focus on getting a mortgage after bankruptcy.
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