Mortgage after Bankruptcy

betterdaysahead

kingstreet said:

I can think of two large high street lenders who use "six years from registration" not six years fro discharge. One tells us to answer no to the bankruptcy question if it was registered more than six years ago.

Excellent - do you mind me asking which lenders these are?

[Deleted User]

To clear up the 6 year situation - As haras_n0sirrah says, many lenders do work on years since discharge
It is correct that bankruptcy drops from the file after 6 years (can't wait for mine to go!), but many lenders see discharge as being the date upon which a bankrupt is released from his or her obligations under bankruptcy. The default point is correct and they should still drop 6 years from date of default.

But bankruptcy debts are only "written off" on discharge - if discharge is suspended (e.g. non-compliance with bankruptcy rules) then the legal discharge from those debts is suspended, in which case it's fair for the lenders to not count that period of suspension - you haven't been 'discharged' or 'free' from the relevant debt for the relevant amount of time (even though it is off your credit file).

A creditor usually won't be chasing you in the intervening bankruptcy year, even though the debt is technically still live (although being managed by the Official Receiver) but lenders will still consider the discharge date to be the date you are "free" again and will count from that in almost all cases.

Just like a lender (even Aqua/Vanquis etc.) wouldn't give you a new credit card until after your discharge - even though it would be perfectly legal for you to have a low level of credit during bankruptcy.

Some lenders do indeed count from bankruptcy date, including some high street ones as mentioned - but to be honest nearly all lenders will count from the discharge date. As I worked in Underwriting, when I was looking for my own mortgage I looked at the broker portals rather than the customer ones (as broker ones are far more in depth) - I can only think of a handful of lenders (not even 5) that would have counted from the actual BR date. Pretty sure a couple of those were the 'proper' adverse lenders too (so they don't have to make special provision/rules/underwriting for the credit impaired, since most of their customers are probably credit impaired)

The FCA/MCOB rule also supports this (see https://www.handbook.fca.org.uk/handbook/glossary/G2950.html) as it's a bankruptcy order in force during the last 3 years. It's considered in force until it's discharged. Hence most lenders that will actually consider bankruptcy will not do so until 3 years post-discharge (e.g. Nationwide and a lot of the smaller building societies) as the requirements for credit impaired mortgages are harsher.

If you've got some lenders saying 3 years discharged, other lenders just follow suit and then say 5 years discharged (i.e. not showing on credit data) or 6 years discharged (unsure why to be honest, as always believed 5 years discharged was fairest). Others (including the very big high street lender), will just ask if it's registered in 6 years or still outstanding - but they're very much the exception.

So 6 years and 1 day since discharge for a 5% deposit mentioned above doesn't seem unreasonable, depending on the facts of the case - but it is pretty confusing for customers when they think they're "free" 5 years after discharge and can obtain all types of unsecured credit (probably at good limits!) to then be told no for a mortgage due to obscure (but understandable) wording at a few lenders.

KeepOnKnitting

betterdaysahead said:

kingstreet said:

I can think of two large high street lenders who use "six years from registration" not six years fro discharge. One tells us to answer no to the bankruptcy question if it was registered more than six years ago.

Excellent - do you mind me asking which lenders these are?

Of course they mind. kingstreet is a mortgage broker, so their entire livelihood is based on knowing useful information like this. They will happily tell you, once you have agreed to pay them for their expertise.