Re-financing two years after bankruptcy?

BrandNewDay

I was wondering if anybody has a hard time getting a more favorable mortgage after they've been at a higher rate as a discharged bankrupt?

I was under the impression that a recently-discharged bankrupt would pay a higher rate. After a couple of years, however, his credit was seen as repaired and he was able to shop around for a reasonable rate.

I think that was true up until a month ago. I was wondering if the credit crunch has affected more people than those who are applying for their first mortgage... perhaps lenders are now being less optimistic about what is "repaired" credit?

herbiesjp

Yes you can indeed look around, and you should still be able to find rates that are more competitive than the one you are currently on - who is you lender and rate?

BrandNewDay

We're with Preferred at 7.44% for two years, then something like 3% above base rate. That's now our only option since August, when Deutsch Bank and some others decided not to do subprime any longer.

We've bought a very cheap house, and there's plenty of wiggle room in our budget. We can make payments up to 12% if we have to. We'd rather not, of course!

The other limiting factor was the type of build - there are steel beams holding up the roof. Our mortgage advisor has a lot of experience with these builds and knew that several high-street lenders will deal with them, but they'll only be an option if we're truly considered rehabilitated in two years.

MortgageMamma

if you give further information i will try to help

1, what is your property worth
2, how much do you want to borrow
3, how much do you and your partner (if any) earn
4, what is your employment status, how long in job etc
5, is there a specific name for your property construction other than a steel frame and do you know if its deemed defective under the housing act?
6, is this a remortgage to consolidate debt or a straightforward remortgage?
7, have you missed any payments on your existing mortgage
8, are the any early redemption penalties still payable if you redeem your preferred mortgage?

BrandNewDay

MortgageMamma wrote: »

if you give further information i will try to help

1, what is your property worth
2, how much do you want to borrow
3, how much do you and your partner (if any) earn
4, what is your employment status, how long in job etc
5, is there a specific name for your property construction other than a steel frame and do you know if its deemed defective under the housing act?
6, is this a remortgage to consolidate debt or a straightforward remortgage?
7, have you missed any payments on your existing mortgage
8, are the any early redemption penalties still payable if you redeem your preferred mortgage?

We're about to buy this property... I was just wondering if we're going to find it difficult in two years.

So, I can't really answer your questions. I'm not looking for a mortgage NOW. I was just wondering if we're deluding ourselves in thinking we'll be able to refinance in two years or if we'll be considered "sub-prime and nobody will touch you with a barge pole" at that point.
But, I'll try.

1. The property is bought for £62,000. I don't know what it will be worth in two years. We're putting 15% down and our mortgage is for £53,000.
2. We'll want to refinance the balance of our mortgage, which will be two years of payments less than £53,000. Probably about £51,000 or so.
3. Earnings are £21,000 pa - husband only (I don't work/work part time/am new to this country, anyway, so never mind me.)
4. He'll have had his job for three years by then.
5. The specific name is Blackburn Steel or something like that. I don't think it's deemed defective or anything. I certainly didn't see anything on the survey to that effect.
6. A straightforward remortgage. We have no other debt.
7. I anticipate saying "no" to this question - we won't have missed any payments.
8. I'm not 100% sure. I tried to figure that out but I can't tell. I'll say "yes."

herbiesjp

As long as you have kept your nose clean throughout that two year period, you will indeed go some way to improve/repair your credit file.

There are no guarantees, as lenders constantly chnage their lending policy/criteria as and when they want to, but you should be able to start looking at better deals in two years time.

You may still be considred sub prime, however the degree of your sub prime status will improve based on the fact of kept credit commitments over the coming two year period - so that alone shoudl improve the deals available to you

HTH

MortgageMamma

I would like to say you will be ok, but i really cannot say that for certain. The american crash has effected the sub prime sector severely and speculation has it that this isnt something that will go away anytime soon.

However as H rightly says if you reduce you mortgage balance and are not stretched on icnome there is a very good chance you should be able to remortgage without a problem