How I got a mortgage within 6 years of BR

The_Real_Cheddar_Bob

Hello all,

some may have read a couple of "tardy" posts by me, i mean well but there you go.

I've read a lot of comments about getting mortgages. This is how i got mine, perhaps it might give some hope.

My 6 years is up on the 30th of September this year. My current Experian credit score is 858 and ive held a mortgage with Yorkshire Building Society since Feb 2016.

To kick off, i'm 31 and went into bankruptcy voluntarily after my business collapsed. Seemed like the easiest option of the most inevitable outcome.

Shortly after my bankruptcy i took out a Tesco 30 day sim. 3 months later i upgraded to a full contract and a year later took at a phone for my now wife and my mum. I used to offer people advice who got declined in my shop of how to get a phone contract, so took my own advice and it worked. Maybe others may want to try this.

I opened a coop cashminder account on the day after i went bankrupt.

In year two of bankruptcy i needed to get a sofa, so with a 40% deposit i purchased one from SCS on a two year finance agreement. This i cleared a year later.

In year three i wanted to buy a new mountain bike, so took out an agreement with Evans cycles, again with a large deposit and cleared this within 6 months.

The coop wrote to me and upgraded my account to a full current account later this year. I then used this site to switch to a barclays current account and also opened a joint nationwide account. The coop previously declined this request as it would affect my wifes credit.

Year 4 my wife needed a car, so i took out a PCP with Mini Financial services, this time i needed a much smaller deposit. Although still provided £2000.

At the beginning of this year i went on a witch hunt against any company that had incorrectly marked my credit file. I cleaned it up within about 8 weeks.

I then started thinking about mortgages, i had been earning a little bit more than the average wage i would say, so i tried a few mortgage companys. Cameron from L&C, (the specialist bankruptcy chap) said i had no chance and wouldnt consider an application for two further years, and most brokers i spoke to said similar. Something silly 50% deposit and some silly interest rate.

I almost gave up hope, but resided myself to renting, oh well.

In year 5 i needed my own credit card for a new job for expenses. My previous employer supplied a company card. I panicked a little but applied for a Barclay card, i needed a high ish limit and got £3000, roughly 5 years and 1 month after bankruptcy. This has been used for corporate expenes since, although is no longer required but the limit went up to £5000.

In year 6, by this point, i have had several finance agreements, regularly used a credit card and cleared the balance, have 3 mobile phone contracts, all utilities and a car on pcp. The only debt i have is the car on pcp, albeit it ends shortly.

Out of the blue i popped into a IFA in my local town and just thought id ask the question about a mortgage and bankruptcy. I was asked a few questions, income, marital status, time of bankruptcy, partners income (£0) why i went bankrupt.

After a brief discussion this IFA said it would be no more difficult than any other young person today, (im 31btw) and all i needed was to find a house and a decent deposit. I had £25k which she said was ample.

So tentatively i found a place, made an offer and applied for a mortgage with this lady thinking id have no hope. It progressed as any other mortgage would and i was offered a 2% fixed for 2 years, with Accord Mortgages (Yorkshire Building Society.)


I have friends who haven't been bankrupt who can't get a mortgage and who have had trouble getting a credit card with a decent enough limit to be useful.

I firmly believe that kicking off with simple lines of credit early into my BR such as the mobile phone rolling sim cards helped create a pattern which led to other things.

I learned to leave the "bad debt" companies alone, they charge so much more to people who are probably a good bit better at paying bills than regular folk. Going BR steady's the senses i guess.

If you need to apply for credit, speak to humans where possible. Try to avoid call centers and think about yourself as someone who is different. If you need to get a sofa on finance and the deal is 48months interest free, apply for two years, no interest free period and as big as deposit as you can. If it works it might make all the difference.


hope this helps.

tigerfeet2006

Thanks for posting about your experience that is very helpful. Not a lot of people come back and post about their mortgage experience so it's really great to have someone who has.

As for your posting on threads, keep it up, the more the merrier. You just need to adjust your posting style a little. For a lot of people this is a scary vulnerable time and we need to give the information in a more gentle and considered manner.

kimplus8

great post, I'm just sorting myself out after a bright LBM so this post gives me great hope that one day- all be it miles away, I will be able to own my own home. :-)

[Deleted User]

You were definitely one of the lucky ones with a full account from the Co-Op! Especially one that was opened AFTER BR!

I used to work there - we had to try and upgrade Cashminder customers, but if they had a bankruptcy on the record 99.9% of them would fail. Computer would tell counter staff they're very likely to be eligible for an upgrade..... app would go through and 'computer says no'!

I think I saw one successfully go through after ~ 3 years discharged, but they had high savings with the bank too, not sure if that played a part (or the underwriters were in a good mood that day....). Others had 5+ years and were declined despite excellent conduct & high salary etc!

I think the Barclaycard has helped you a lot - it's a reasonable limit and you've used it properly. I assume they weren't included in your bankruptcy? For people that were (including me ) they are they seem to decline until the BR drops off

Well done on the mortgage - great that you've been accepted. 25k is a great deposit - what LTV did you end up in? I'm hoping for a mortgage from Oct 2018 (3 years discharged) as that's when you're no longer 'credit impaired' under these wonderful new MMR/FCA guidelines - the lending criteria at a lot of the building societies seem to open up for apps up to 80/85% LTV.... waiting a bit longer I guess it's possible to get in at 90 or at a push 95%

The_Real_Cheddar_Bob

The coop gave my first credit card, forgot to mention that. It had a £1000 limit and they sent it to me in year 3 along with the account upgrade. The bank said i was a low risk.... odd. It happened when i got my job in one of the big 5 oil companies.

My business partner has had a terrible time by comparison. He couldnt even get a mobile phone contract if he wanted, and considering we used to sell them, its a little hard to swallow.

the only bank that was included in my BR was Natwest and that was the remainder of our business overdraft. I went bankrupt because of my company director guarantees.

So unlike some, my bankruptcy was effectively a paper bankruptcy to alleviate liabilities, actual physical borrowed monies very small in comparison. So in that respect apart from Natwest, the high street banks have no gripe with me or my business partner.



To answer some other points,

yes i agree, Barclaycard has helped me exceptionally. My wife said if it wasnt for the credit card she thinks this wouldnt have happened.

Our LTV is 85%, and whilst £25k is a good deposit, it seems to be the norm for those getting on the ladder. The most the bank would lend me was £128k. So if youre good at maths we bought a house for £140,000. The house was on the market for £159,950. Just shows you if you ask you might get. I didnt trust the agent would give the offer to the owner so i asked the postman who owned the house and it turns out he was two houses away. So i knocked his door.


What is interesting about the Yorkshire Building Society, is they dont ask, "have you ever been bankrupt" they ask, "have you been bankrupt in the last 5 years" a completely different question. I dont know where they got the 5 years from, i would have thought 6 is the better for them to ask.

Also our mortgage advisor cost £2000. Its a lot of money, but without her im sure we wouldnt have got a mortgage. What she said to us was, that like most business she has an account manager at various banks. This particular bank she knew the account manager well, a relationship of many years as YBS was one of the mortgage companies not to go pop with the northern rock mortgage thing.

I would highly recommend finding good advice. It might cost money, but it could be the difference between getting a mortgage and not.

[Deleted User]

Year 3 must have been approx 2013/14 looking at your dates (BR late 2010)..... that's when I was working for them!! The credit card is an even bigger surprise - I suppose there will always be exceptions to the rule, and it's what makes the whole area so intriguing (once my bad credit is older, I'd love to move into Underwriting)

Maybe they liked your employer and/or salary so weighted that more in your favour than they would for the 'average' person maybe working at a typical high street store? Either way, it's worked out very well for you!!

The 'low risk' thing is very common - I used to see many that we'd consider low risk on internal scoring, but apps would then be blocked and their rating subsequently changed (so why they don't just do that in the first place is anyone's guess!!).

As much as I agree about it being a 'paper bankruptcy' (the complete opposite to mine!) - unfortunately these days there is so much 'computer says no' around and the Insolvancy/Bankruptcy flag applied to an account means the same whether it was for £5,000 liabilities (maybe going BR without taking advice into DMP etc), £25k, £50k or £100k+ - so you'll only see a benefit on manually underwritten applications for larger limits (e.g. Mortgage) or possibly on appeals for declines for smaller limits. Although all default balances are listed on my credit report, I doubt lenders actually add them up during scoring (although they easily could) - I think they'd just think Bankruptcy = bankruptcy, regardless of the amount, UNLESS it's manually underwritten.

As you say, good advice really does pay - totally agree with that. A £2,000 broker fee is, in my opinion, absolutely mental because I know I can do all the leg work myself for the best deal, especially coming from a finance & accountancy background.

But, and this is the big but, it's those special relationships between the broker and the lender that you are effectively paying for - especially for an adverse credit mortgage. So, reluctantly, I am factoring up to £2k into my costs for a good adverse credit broker. Also a lot of adverse lenders (not including YBS in that) will only lend via brokers otherwise they'd be inundated with people trying for a 95% mortgage 2 weeks after discharge etc etc!

The_Real_Cheddar_Bob

thing is, my ifa doesnt specialise in any form of bad credit, she normally helps "regular" folk get mortgages.

Reading your post ive got even less of an idea now of how im in the situation i am.

I hope you can get to the goal you are aiming for.

The one thing it bankruptcy taught me, the majority of people make a judgement, the few who don't often have good advice to give.

jellybaby104

Hi,

My partner and I have just enquired with YBS for a 90% mortgage. My partner was discharged from bankruptcy in 2007 and has a 'very good' credit rating. Mine is 'excellent'. Even though he has bought and sold a house since they would only permit us an 85% LTV so that seems to be a threshold for this lender. Also they asked us if we had EVER been declared bankrupt, not had we in the last 5 years. I mention this just to give people a heads up. Lastly, we only wanted a mortgage which was 2/3 what we could have based on affordability alone but this made no difference. Just some things to think about for anyone in a similar position.

kezza90

Hello,


All the posts gave an interesting read, I thought it may be helpful to add my experience from within the last few days.


I went bankrupt in 2007 and had a house repossessed in 2008 (the worst combination I'm told for getting another mortgage).


I spoke to Leeds Building Society yesterday who told me that because both the BR and repossession are from 6 years ago they aren't an issue, the guy on the phone did a credit check and said I had "excellent scoring" and would therefore be able to gain a LTV of 95%, I was very surprised. I said I'd like to borrow (theoretically) 180K and put down 9k and he said that wouldn't be a problem based on my earnings. I said I wasn't in a rush to organise the mortgage but he said that as soon as I find a house to ring him back and choose which mortgage to go for. I am very dubious about this, especially when I've read so much to say I wont get a mortgage, but it does fill me with a little bit of confidence, I'll see what paperwork I get through the post but I think he said I should receive an agreement in principle.


Am I wrong to get my hopes up?


Thanks

[Deleted User]

Leeds website has the following for Mortgage Advisors/IFAs - so sounds like there won't be a problem

As long as your salary will allow for that kind of mortgage (once they've done affordability & stress testing) then it doesn't seem like you'll have any issues

Bankruptcy / Individual Voluntary Arrangement (IVA):
The Society does not accept applications for individuals who are subject to:

A Bankruptcy Order unless discharged more than 6 years ago.

An Individual Voluntary Arrangement, unless discharged more than 6 years ago.

Previous property repossessions, unless greater than 6 years ago.


Obviously they are just guidelines, and each case is different, but if he says you've got an 'excellent' score, that's a boost. What is your credit like since Bankruptcy? I'm assuming no missed payments etc? As long as you've actually been 'credit active' since bankruptcy, even with credit builder cards etc, then it looks good - good luck

The_Real_Cheddar_Bob

jellybaby104 wrote: »

Hi,

My partner and I have just enquired with YBS for a 90% mortgage. My partner was discharged from bankruptcy in 2007 and has a 'very good' credit rating. Mine is 'excellent'. Even though he has bought and sold a house since they would only permit us an 85% LTV so that seems to be a threshold for this lender. Also they asked us if we had EVER been declared bankrupt, not had we in the last 5 years. I mention this just to give people a heads up. Lastly, we only wanted a mortgage which was 2/3 what we could have based on affordability alone but this made no difference. Just some things to think about for anyone in a similar position.

amazing, they never asked us have we ever been bankrupt on our application..... they asked in the last 6 years. i wonder if thats changed recently?