Mortgage after bankruptcy and repossession

hodge263 · 6 July 2015 at 8:58PM

Hi,

This question may have been answered previously but I am having difficulty finding up to date information on this topic and am hoping you may be able to help.

I filed for bankruptcy on 06/09/11 and the shortfall from my repossessed property was included (handed keys back to RBS almost 18 months prior to this but the property didn't sell until July 11).

I never thought I would be eligible for a mortgage again in future and had resigned myself to renting. I then read that mortgages are available to ex bankrupts as long as they have a healthy deposit. My partner and I are living with my parents whilst we save up and hope to buy in after Sept 2017 once my six years are up and hopefully I have a clear credit file. My partner has never been in debt.

It never occurred to me (very naively) that the inclusion of a repossessed property would reduce our chance of a mortgage even further. Have any of you been in a similar situation and had a positive outcome? I'm worried that after living with my parents for four years and saving a 20% deposit we will be rejected and end up renting after all. If we have no chance of a mortgage we would go and rent now.

Looking forward to hearing from you with fingers crossed for good news.

Thanks guys,
Anna

alastairq · 7 July 2015 at 10:09AM

You will have a greater choice/opportunity once the BR has reached the 6 year period on your records.

However, the re-possession is a blacker mark than the BR.

You should use a whole-of-market mortgage broker, given the history.

hodge263 · 7 July 2015 at 11:01AM

Thanks Alistair. Am I right in thinking it is 6 years after the date of bankruptcy not 6 years after discharge date? Keep reading conflicting posts.

chasingfreedom · 7 July 2015 at 1:27PM

Alastairq, out of interest where is the 'blacker mark'? I assume if the BR comes off your file 6 years after the bankruptcy any record of repossession would aswell? Or is there another database somewhere regarding repossessions?

owlet · 7 July 2015 at 1:38PM

hodge263 wrote: »

Thanks Alistair. Am I right in thinking it is 6 years after the date of bankruptcy not 6 years after discharge date? Keep reading conflicting posts.

You are right. It is 6 years from the day you were made BR - not discharge.

GazHatesBanks · 7 July 2015 at 1:52PM

When applying for a mortgage, most lenders will ask if you have EVER been bankrupt or had a property repossessed so you will need to declare it (remember that the bankruptcy is recorded permanently and your solicitor will check for this).

I don't know if mortgage repossessions are still recorded, but you will be asked the question anyway and it is never a good idea to lie on an application form!

This doesn't mean that you will never get a mortgage, but will reduce the available number of lenders hence why you should consult a whole of market broker.

I have made tentative enquiries and the information coming back from brokers at the moment (I was made BR Dec-11) is that at this stage mortgages are available if you have either bankrupty or a repossession history but not both.

After the 6 years from bankruptcy have passed (Sep-17 in your case) it should be easier to get a mortgage, possibly even from select high street lenders.

I'm using the time to keep adding to my already reasonable deposit and hope to have around a 40% deposit by then, but if the market changes then I may be able to buy something before then (lenders do seem to be slowly becoming less risk averse than they were immediately after the credit crunch)

hodge263 · 7 July 2015 at 2:29PM

Thanks for the responses I really appreciate it. Feel a lot more positive about things now!

betterdaysahead · 8 July 2015 at 6:32PM

As Chasingfreedom asked - is there a register of repossessions kept anywhere? And from what I can see your BR details recorded in the London Gazette are minimal - only your name, occupation and address at the time. I'm not sure that any of that is personally identifiable information. Or am I being naive?

2kadmin · 9 July 2015 at 2:17PM

Hi in answer to your questions and some of the points raised as part of this thread.

Repossessions are recorded as part of your credit history, "The Committee of Mortgage Lenders (CML) is a trade body representing the mortgage industry. It has 111 full members (banks, building societies and other mortgage lenders) and 86 associate members (other institutions who have an interest in the mortgage market) - and membership covers 94% of all UK residential mortgages.

CML members report repossessions - called the 'Repossessions Register' - to some credit reference agencies for the purpose of trying to avoid over-indebtedness. An entry on the Repossessions Register will have a serious impact on your credit score and will remain on your credit report for six years."

The solicitor check (the £2 bankruptcy search) is a land registry search known as a K16 search and goes back over 5 years from the date of the last entry which will be about a month after you were declared bankrupt, after this period it won't show your record. But might flag up others with a similar name, however this is the only check your solicitor is going to make.

So after six years your record will be clean (including the repo), however your bankruptcy is still a matter for public record and still can be located using the London Gazette. I cannot recommend lying about your history, so find a broker or search online for "xxxx mortgage lending criteria" where xxxx is the lender you are hoping to borrow from. This will tell you way more than you think for example Halifax state the following about the big bad mortgage question.

"The Bankruptcy question should be answered as yes if you have had a bankruptcy/IVA or Debt Relief Order within the last 6 years OR still have an outstanding Bankruptcy Restriction Order."

So post 6 years BR you could answer that question NO, as per their guidelines.

I wish you luck on your quest for a mortgage, save and save away is all I can say. I have a Mortgage, post BR and Post repo at 4.29% with Nationwide, which was achieved without lying and not through a broker at five and a half years post BR.

I Hope this helps

2k

betterdaysahead · 9 July 2015 at 4:48PM

Great information 2k and great advice too. Thanks!

hodge263 · 9 July 2015 at 5:04PM

Thanks for your response 2k it's really helpful.

Mortgage after bankruptcy and repossession

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