Mortgage with a DRO (Debt Relief Order)

AmyFitz

I have been discharged from my debt relief order this year and have been keeping a close eye on my credit rating, I have not missed any payments for many years and have taken out a small credit card to help increase my rating even further.


My husband and I have a combined annual income of £58,000 and are hoping to be able to use the help to buy scheme with the 5% deposit and 20% equity loan so a 25% LTV Mortgage.


My question is; are there lenders out there that would be willing to take us on? We understand that the arrangement fees are likely to be higher as is the interest rate but do not wish to keep going if we are bound to get rejected.

ACG

I dont think they will. A debt relief order is a form of insolvancy and looked on like bankruptcy.

Typically lenders would not look to accept bankruptcy until you have been discharged for at least 3 years.

I do not do HTB Equity loans (I only do the mortgage guarantee version) so I am not as clued up on that as some of the brokers on here but I think mortgage lenders normal criteria would prevent you for a couple of years.

Madbags

We got a mortgage with Nationwide in December 2014 with normal rates. I had been discharged from my DRO for around 3 years.


We hadn't tried before that so I couldn't tell you how soon you have to wait but ACG is usually spot.

AmyFitz

Thank you for your reply, we had thought as much and this is good news in a way as it just means we have more time to save for our deposit and hopefully will be able to buy without using the Help To Buy scheme.

ACG

your probably going to need a 15% deposit minimum but ideally 25% if you are looking to apply after 3 years discharged. Although a lot can change in 2 years so you may be able to get away with less when the time comes.

Mary83

Was the DRO in joint names? If it was in your name only, one option would be to possibly have the mortgage in your husbands name only (depending on his financial circumstances) you could then be added at a later date. Many mortgage lenders will do a soft check credit check which should highlight any potential issues you may have being included on the mortgage

Madbags

Yes I forgot to mention that although we were accepted for a mortgage with NW 3 years after my DRO, we applied for a £100,000 mortgage on a £145,000 property. The majority of the deposit coming from my partner.


So the LTV was extremely in our favour.