bankruptcy - computer says no

HPsauce_3

Hi

Hope someone can help?

I have recently married, my husband was declared bankrupt over 3years ago, before we met. He is self-employed. We now wish to buy a property together. I have a mortgage already which, being on a good rate , I would like to port to new property. As a sole applicant the mortgage available to me is insufficient for our needs as there seems to be no mechanism for taking both our incomes in to account. Will we able to apply for a joint mortgage with his credit history as this would enable us to borrow the necessary amount? We are currently in rented property and paying much more than a mortgage. I have a 25% deposit available from the sale of my flat.

Any info on how to approach this appreciated as my current lender only seems to make decisions based on inflexible computer tick boxes

many thanks

kingstreet

Most lenders do credit score and often the computer does say no.

However, where bankruptcy is concerned, non-scoring lenders like smaller building societies will simply have a human say no, instead.

Only Halifax says it will accept ex-bankrupts if they pass their credit score. The agreement in principle, or mortgage promise doesn't work for this. The only way to know for definite is to submit a full application, sorry.

Be careful with other lenders. If you don't disclose the bankruptcy you may get right through to exchange, as it won't be picked up by the lender, but it won't get past the solicitor's bankruptcy search and you can then have your mortgage offer withdrawn at great expense.

HPsauce_3

Hi

Thanks for the info - that's helpful to know .

The problem with a sole application is that it doesn't account for my husbands financial contribution - therefore the offer is based on a single income household - how can his contribution be taken in to account?. He pays a fixed sum in to my bank each month and although this is not the total of his contribution (we both earn roughly the same and share all costs) my lender said this could not be counted as it was 'unofficial'. I'm sure many couples are in a similar situation.

Any ideas?

kingstreet

From your opening post I saw the "sole applicant" route was a non-starter, so I haven't mentioned it.

What I've said is all based on a joint application so your husband's income is taken into account, as there's no way it can be if he isn't an applicant.

I don't know what the others think, but an application to Halifax seems the only option...

ACG

I have seen other lenders who will accept ex bankrupts so long as it was in the past (around 4 years), only halifax has no stipulation for the length of time.

However they will credit score so you need to check what thats like really.

How long has he been self employed for? Most lenders will request 3 years accounts and do the average of the 3.

Dave_Ham

The ex bankrupts I have previously placed have all been Halifax and to be honest, most of them I lined up post bankruptcy telling them to open accounts with Halifax and use as their main bank. This is because although it has cost Halifax dear, they always place huge significance on how accounts have been run with them in addition to the external credit score.

I also assume that the single applicant income route will not work as have not been mentioned?

I appreciate your situation and I understand the common sense attached to it. However, the banks view on someone going bankrupt and not paying back typically HMRC and the banks are not going to stretch to them reaching out the olive branch to then include income from or lend money again to someone previously declared bankrupt. The fact he is self employed just compounds this woe, adding to potentially what numbers are declared for "tax" and the banks simply are not interested.

Is there another family member that could go on the mortgage with you, although not live there? Many banks now allow this...

HPsauce_3

Thanks everyone - all really helpful if somewhat disheartening.

My husband has been self-employed all his working life - over 20 years!

If going down the family member route, as suggested, does this need to be someone who is of working age, or could parents (retired but mortgage free) be used?

Ever hopeful...

Thrugelmir

Dave_Ham wrote: »

The fact he is self employed just compounds this woe, adding to potentially what numbers are declared for "tax" and the banks simply are not interested.

Why would lenders be interested in someone who has committed serious tax evasion? A tax investigation is a gruelling process where the onus is on the tax payer to prove their innocence. Many find themselves bankrupt at the end. As the combination of tax, penalties and interest far outweighs the "money" that vanished. There's no 6 year limit either in terms of HMRC going back its open ended.

As for self certification we all know what a mess that created. As people didn't in reality earn their declared incomes.

Dave_Ham

They do not have to be of "working age" but then a lot will depend upon other factors such as:

Age, Proveable income into retirement, your income, any other credit commitments (both) and therefore you may need to take the mortgage over a lower term and therefore more costly on a monthly basis..

Lots of variables to consider, but have done this type many times over the last couple of years and the banks are happy with it (well some are)

holly_hobby

DaveH and Kings. as usual have given good sound helpful advice - I presume the ex-bankrupt means he's been discharged.

I am also assuming that the bankruptcy has not been satisfied i.e your husband has not repaid his creditors party to the BO - which would help support any mge application.

This is because your Hubby will have demonstrated to any lender, that not only has he clearly been in a position to save a decent amount of capital to facilitate buying a property,and subsequently seeking a mortgage (i.e looking to enter into more debt post discharge), but more importantly that now in a more stable financial position (ie being in a position to save), he has also recognised and recompensed as part of his improved financial position, those whom so sadly were disadvantaged when he was unfortunately declared bankrupt - and in essence will go along way to demonstrate to any lender, his morals, attitude and accepted responsibility with respect to debt and his creditors whom were effected by his bankruptcy.

The above isn't meant to come across as any type of moral lecture, but I mention as another action that he may take to help re-build his credit worthiness and attractivness to lenders -- which will have unfortunately taken a nose dive as a result of the fairly recent BO.

Ooh by the way talking about credit scoring - Ipswich B Society don't credit score and indivdually underwrite, so may be worth consideration.

They also lend throughout the UK for direct apps, but do have geographical restrictions for intermediary (broker business).

So may be worth giving them a call for an initial chat through just to get a feel on their opinion, here's a direct link to the site & mge page .. http://www.ibs.co.uk/mortgages

Hope this helps and good luck !

Holly x

silvercar

I am also assuming that the bankruptcy has not been satisfied i.e your husband has not repaid his creditors party to the BO - which would help support any mge application. It is illegal to repay any creditors whose loans were included in your bankruptcy. You would have to make payment via the Official Receiver.

This is because your Hubby will have demonstrated to any lender, that not only has he clearly been in a position to save a decent amount of capital to facilitate buying a property,and subsequently seeking a mortgage (i.e looking to enter into more debt post discharge), but more importantly that now in a more stable financial position (ie being in a position to save), he has also recognised and recompensed as part of his improved financial position, those whom so sadly were disadvantaged when he was unfortunately declared bankrupt - and in essence will go along way to demonstrate to any lender, his morals, attitude and accepted responsibility with respect to debt and his creditors whom were effected by his bankruptcy.Unless you have shed loads of money, the wisdom of using your hard earned deposit to clear the bankruptcy is lost on me. Not least because without this deposit money your LTV will be hgher and consequentially harder to obtain a mortgage.

You went bankrupt to give yourself a way out from an impossible financial situation I assume. The law allows you to do that and to make a fresh start. To start looking at repaying your debts, which will include OR fees as well as the original debts seems an odd way to move forward, lottery wins aside.