Discharged bankruptcy and mortages

Cut_Thumb

Hi all, 1000 threads is a lot to look through, so sorry if this has been tackled before.

Basically my wife was discharged 6 1/2 years ago, earns around £43k, and is keen to buy a property. I work part time and am a 'house husband', although I am just about to enter into a DRO (6k debts due to mental health episodes impacting on career; yes we do probably sound a bit flaky...)

Unfortunately my wife took out a few pay day loans last year, all of which were paid off in full, but we've been told that they can impact on lenders' decision-making. That aside she has been bang-on for the period of discharge, sorted her credit out (now 'excellent) and has a car loan and a proper grown-up credit card.

We'd kind of written off any hope of buying somewhere but in her contacts with Experian she was told that it would be possible. On looking into it, though, aside from needing a larger than average deposit it seems that the interest rates for former bankrupts look eye-watering to say the least. There is no option of a joint mortgage.

Could someone explain our best options, eg is it worth approaching a specialist broker, and would it pay us in the long term to swerve the DRO and just sort my debts out regardless of the impact? We aren't financially savvy (clearly) so please can any respondents keep it fairly simple. Thanks in advance.

Mr_F_Dorsetty

As you are aware, you've got a serious problem if you are not looking to pay viscious interest rates, which I wouldn't recommend.

Having in a previous life been involved in supplying mortgages to both commercial and the individual, all I can say is be very wary of 'specialist' brokers. Most will charge you quite a substantial fee to look into your case and they are not miracle workers.

The bottom line is why would anyone want to risk their money with people with poor credit histories for low interest?? People never seem to ask themselves honestly "If it were my money, would I lend it to me for peanuts?"

Reading between the lines it appears to me you'd be far better off renting until you've learnt to live within your means, debt free and without needing credit for a good few years.

Your life will be a great deal less stressful if you did manage to do that.

Cut_Thumb

Thanks for the reply, and you make some good points. Since the bankruptcy we generally have lived within our means aside from the period which I touched on (not going to go into detail but I left a job in social care to move into a zero hours teaching post, which coincided with a lengthy episode of an ongoing MH issue) which led to my debts and the pay day loans. We realise that continuing to rent is the way forward, and that we need to save a decent deposit. The credit card my wife holds was taken out solely to support her credit rating. I'm mentioning all of this in case anyone is put off answering, assuming we're sat up playing roulette on a 52" Bright House tv all night and hoping to scam a cheap mortgage out of some unwitting company

WLITC

Cut Thumb, I would suggest posting something in the ‘Mortgage and Endowment’ forum rather than here as there are several mortgage advisors on there that post very good advice and have experience with ex-BR.

Assuming your wife had a sufficient salary (has she used a mortgage calculator to see how much she might be able to lend?) and has a clean credit file (no defaults, missed payments, etc) then she should be able to get a mortgage at this stage. I am ex-BR and looking to buy in Autumn 2015 (at which point I’ll be about 4 ½ discharged) and have been advised its possible with a 15% deposit and should be able to achieve an APR only slightly higher than the standard rates currently on offer, so ex-BR doesn't mean a horrendously high APR either.

As for Mortgage advisers, for the average person they probably aren’t needed, but when its more complicated (i.e a history of bankruptcy, etc) then its probably money well spent. Fee wise I believe most only charge around £250, but as per the MSE mortgage guide, many charge no fee and get their money instead as commission direct from the mortgage companies.

The only thing I can see that could be troubling is you entering into a DRO as you will almost certainly have a financial association with your wife and that would show up on your wife's mortgage application/credit search. If you guys have saved some deposit, would it not be possible to pay down some of that debt to avoid a DRO all together?

Cut_Thumb

Thanks, WLITC. I've opened a new thread as you recommended. I'm now trying to find out if it's possible for her to be the sole named owner, as her projections have been based on her income alone.