How I got an 85% LTV Mortgage 4 Years after Bankruptcy with 10 Repossessions

It is possible to get a mortgage when a bankruptcy is still showing on your credit files and there has been one or more repossessions as part of that. This is how I went about it:

I read everything on the Forum about how to clean up credit files. My situation was a little unusual in that I was a former landlord. I went bankrupt after my divorce when I could no longer manage the mortgages or maintenance of the properties which were all hugely into negative equity.

One property which was in my sole name was voluntarily surrendered during the year of my bankruptcy and the other jointly-owned properties remained as part of my bankruptcy estate but the beneficial interest in them passed to my ex-husband. I no longer had any liability towards those mortgages, despite the mortgage companies insisting otherwise and subjecting me to intense harassment.

I first wrote to the mortgage companies and insist that they mark my credit files as ‘partially satisfied’ or ‘partially settled’ as at the date of my discharge from bankruptcy as this is the date when the bankrupt is clear from those debts. The mortgage companies did not agree and said that mortgages weren’t included in bankruptcy. The Financial Ombudsman Service were excellent and eventually found in my favour when I sent them a copy of Sections 281(1) and 382(1) of the Insolvency Act 1986. I had to appeal the initial decision provided by the Ombudsman’s Adjudicator which was incorrect. It took around 18 months to get my credit files marked correctly after hundreds of letters.

A couple of years after my bankruptcy my ex-husband stopped paying the mortgages on the properties and they were all repossessed, some as late as this year.

I took advice I had read on this forum and I made a list of all the mortgage companies from internet searches. I also had a look on their intermediary pages which gave information on whether previous bankruptcies would be acceptable or not. I telephoned all those that would accept them. I did not mention the repossessions at this stage. The mortgage company I chose to go with (who I will not name as every person’s situation is different and what is right for one is not right for everyone) was advertising on TV. I took this to understand that they were looking to increase their mortgage books. If a mortgage company is prepared to take on former bankrupts then they are also not so risk averse. My initial appointment with the building society was going well until I was asked whether I had ever had a property repossessed. At this point the officer’s attitude totally changed. My advice is to stand firm and do not allow people to get away with prejudice or treating you as a pariah because bad things have happened in your life. It’s how you deal with them that is important.

I was prepared for this and provided a document which succinctly gave the information about my bankruptcy and the voluntary repossession and how the responsibility for the properties had passed to my ex-husband after that. I included the relevant Insolvency Act references. I insisted the building society officer scan this and email it to the underwriters directly (he wanted to do it in his own words but I had no confidence that he understood what I was trying to get across). He did this but basically told me I had no chance of getting a mortgage.

A couple of days later I had a call to say the underwriters would agree to provide me with a Decision in Principle. It wasn’t easy applying for the mortgage. The underwriter assigned to me took against me straight away with the bad attitude and prejudice I spoke of above. She turned me down initially with a standard letter saying they don’t accept repossessions. I managed to speak to somebody helpful who agreed to send my case to the senior underwriter to look at. Much to my assigned underwriter’s disapproval it was agreed to go ahead with my application. She was unhelpful all the way through the process and I had to keep chasing and pressing by sending in polite letters and phonecalls. In a normal situation I would have made a complaint about the bad attitude but obviously that wasn’t an option.

It was agreed that I could have an 85% mortgage and half of the deposit was gifted by my parents. I got a really good 5 year fixed rate (one of the best on offer in the high street) so that when I look to re-mortgage at least there will be no bankruptcy on my credit files, there will be 5 years of payment history and the majority of the repossessions will be over 6 years old.

From my initial appointment with the building society to moving into my new house took 5 months of hell, but it was worth it.

An awful lot of determination is needed – every single specialist mortgage broker I went to told me I had zero chance of getting a mortgage. I proved them wrong without having to pay out expensive fees to do so. If you can get past all the bank officials through to the actual underwriter who can make a decision as a real person and not a computer, then there is a chance they will find in your favour provided you meet all their other criteria for employment, etc.

I also find that well-worded letters that are carefully written with good spelling and grammar are treated more seriously. I send everything by recorded delivery so I can be sure it’s been received and I keep paper and electronic copies of everything.

Good luck to anybody who is searching for a mortgage and don’t give up.