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    how to get a mortgage after bankruptcy
    • #1
    • 11th Dec 10, 7:38 AM
    how to get a mortgage after bankruptcy 11th Dec 10 at 7:38 AM
    You too can get a mortgage after bankruptcy.
    I have just bought a house for £250k after being declared bankrupt in April 2005. Conventional wisdom that Bankruptcy ends your chances of ever getting a mortgage is just not true but there are some golden rules to follow.
    If you want to know how I did it, read on.
    Golden Rule One Ė Sort your life out.
    Iím not here to judge, I went bankrupt through a combination of bad luck, greed, laziness and burying my head in the sand. The important thing is learn from your mistake.
    Since then my wife and I have been pretty much perfect customers, pay all your bills on time, live within your means. When you can get a credit card use it but pay it off every month. I used mine just for petrol and paid in full as soon as the bill came in. when the time is right apply for catalogues and do the same. You need to rebuild your credit footprint by getting the low end low value lending and making the most of it.
    We owned a house and my wife had to get a loan from the bank to buy out my half of the interest in it. We scrimped and paid that off in half of its planned term. It was not easy but it hugely increased her customer score at her bank.
    Likewise I left lots of money in my account as long as I could to look like a stable character.
    Do your life laundry; cut your outgoings, find bargains, it all helps. Check your credit file with a fine tooth comb. Make sure that each lender shows your account as settled or partially settled and with the settlement date as the date of your bankruptcy discharge. I had several that had either not put it as settled or had it showing as settled years after discharge. This has the effect of making you look as though your money troubles have continued since bankruptcy and will make any financial institution give you a very wide berth. It can be difficult to get it corrected but persist using all the advice on the rest of this site as it is essential.
    Final tip here if you owed a lot of money when you went bankrupt you probably had PPI. I had a loan from my bank pre BR which they said I had to take out PPI for or they wouldnít let me have it. When I complained to the Financial Ombudsman I got £3,000 back which enabled me to replace my car when it died without having to borrow money.
    So rule one, sort your life out. If you havenít done this, donít even bother with the rest.
    Golden Rule Two: Persist
    I went to a broker on a personal recommendation; someone who purported to be experienced in my kind of case. He told me I had no chance and would have to wait at least another year and even then wouldnít be able to afford a house at more than £200k. (His name was Jon Shaw from Positive Solutions Ė donít even bother)
    A good friend of mine told me not to give up but to phone around mortgage companies myself. I phoned as many as I could find. In the end I phoned 84 different mortgage providers and 18 said that they would consider me. I have listed them at the bottom but you have to do it for yourself. They judge it on individual circumstances and they change their policies all the time.
    Golden Rule Three: Do your research
    At this stage donít give your real name (you donít want to leave footprints and some of them will want to do a soft search on you.) but be completely honest about everything else. First explain how long you have been discharged and your position and ask whether they will consider you. If they say yes then you need to know what their lending policy is. Some still do multiples of income, most say they base in on affordability the reality is that they are all different. Some will give you a formula, some will ask you for your details and then say how much you can borrow without telling you how it is worked out, some wonít go that far without running a credit check.
    The next stage is to ask how they assess customers. Some do a hard computerised credit score. This is likely to be a problem for you. Firstly you have an adverse history so it will probably knock you out, second it will record a visible search on your file. If you apply for a mortgage and another lender searched you two weeks ago then the second lender can be pretty sure the first one said no and mark you down for it.
    Other lenders use a combination of scoring and other techniques. If you have an account with a lender already they will take into account your customer score which is internal to that institution.
    For me, the best bet was to go with a building society that didnít score at all. Instead they got full credit files for myself and my wife and went through them with a fine tooth comb. They also went through bank statements, payslips, everything. They raised lots of queries, wanted to know what certain payments were for. The bottom line is that a human being came to a judgement about whether I had sorted my life out and decided I had.
    Everyone is different though and so what worked for me might be different for you. Try to get the people from the lenders talking, explain what you are doing. Some will be friendly, some downright snooty and rude. The friendly ones, however, can give you some really useful information.
    Donít go with the first one you find. Go through all the lenders you can find and then make us a short list. Prioritise them. If necessary ring round again and get further details.
    Ultimately you will get down to a handful that look really promising. Then decide who you are going with. It can still break down even at this point. I didnít get a mortgage with the provider at the top of my list and you might not either.
    Golden Rule Four: Donít ever give up!!
    You are then faced with an agonising time of sending information back and forth but hopefully it will be worth it.
    I moved in October 2010. I earn about £45k a year. I bought a house for just under £250k on an 80% mortgage; the other 20% came from equity in the house I already owned. i'm now paying £1021 a month for my mortgage.
    Getting a mortgage is not easy after a bankruptcy but if you get yourself sorted it is possible so donít give up.
    The lists of those I rang and those who said yes are below BUT EVERYONES DIFFERENT SO YOU HAVE TO DO YOUR OWN RESEARCH

    If you want to know any more, just ask.

    Good Luck!!
    The people I rang were:
    Royal Bank of Scotland
    Cheltenham and Gloucester
    Manchester Building Society
    Yorkshire Building Society
    One Account
    ING Direct
    First Direct
    nationwide Buiding Society
    newcastle Building Society
    Scottish Widows Bank
    Barnsley BS
    Cambridge BS
    Chorley & District BS
    Coventry BS
    Mortgage Express
    alliance and Leicester Direct
    Bank of Ireland (NI)
    Bank of Scotland (Mortgages)
    BM Solutions
    Buckinghamshire Building Society
    Chelsea BS
    Cheshire BS
    Clydesdale Bank
    Darlington BS
    Derbyshire BS
    Direct Line
    Dudley BS
    Dunfermline BS
    First Active
    Furness BS
    Hanley Economic BS
    Intelligent Finance
    Ipswich BS
    ITL Mortgages
    Kent Reliance BS
    Leeds BS
    Leek United
    Legal & General Mortgage Club
    Lloyds TSB
    market Harborough BS
    Melton Mowbray
    Monmouthshire BS
    National Counties BS
    Newbury BS
    Northern Rock
    Norwich & Peterborough BS
    Nottingham BS
    Pink Home Loans
    Post Office Ltd
    Principality BS
    Progressive BS
    Saffron BS
    Scottish BS
    Shepshed BS
    Skipton BS
    Stroud Swindon BS
    Teachers BS
    Co-operative Bank
    Mortgage Works
    Tipton & Coseley
    West Bromwich Building Society
    Woolwich (Barclays)
    Yorkshire Bank
    Bath investment and BS
    Chesham BS

    The ones that said yes were:
    Norwich & Peterbororgh
    Saffron BS
    /skipton BS
    Tipton & Coseley
    Cheltenham and Gloucester
    Manchester BS
    Yorkshire BS
    Barnsley BS
    Cambridge BS
    Coventry BS
    Clydesdale Bank
    Dudley BS
    Furness BS
    Kent Reliance
    Leeds BS
    Leek United

Page 3
  • colmac71
    Hi all, I said I would update you....

    Okay so this has been quite a journey - Clearing up my credit file has been a nightmare! been on it for about 8 months in total

    Just one last creditor (Picture Home Loans) but Call Credit have temporary surpressed it as Picture aren't responding to them (I've called them 6 times, mailed them 3 times and they say it's no them but Idem - and Idem say its not them its Picture.

    Anyway tried a few mortgage companies as previously suggested.
    Spoke with a number of mortgage advisors too - and they range from amazingly hopeless to somewhat hopeless. (2 wanted to charge a fee 1 wanted to charge £495 - maybe good if you dont want the job of doing the leg work. The second wanted to charge fees of approx 1% of the purchase price.

    As has previously been suggested just ring quite a few of the building societies - the list that has previously been suggested was very useful. The smaller ones more so - and some don't rely purely on a credit score!

    I know that quite a few lenders want you to wait a full 4 years after discharge before applying (Skipton for example)

    25% deposit seems to be the key too (or more)

    I did make an application to National Counties - they were great EXCEPT I got a knock back as my loan amount was under £125,000 !!!

    I'm literally awaiting a phone call from another building society to give me the YES/NO - it's been to the Mortgage Executive and he has said yes (did question me about reasons for bankruptcy and how i'd pay deposit etc etc) but the formal application is now with the underwriters! When I spoke with them an hour ago it is on her desk! so am waiting for the phone call!!!

    I'll let you know who it is as soon as they have come back to me but please keep your fingers crossed.

    Several mortgage advisors have said Nationwide would look at it individually (although others say not!), Yorkshire Building Society were going to look in to it but never ever got back to me (as it went to branch rather than being dealt with by head office)

    Anyway hope this helps for now.
  • colmac71
    Hi All
    Quick update
    I have a mortgage !!!! (subject to survey and employer reference and proof of deposit)
    I went BR in April 2008 / discharged 2009
    Cleaned up every one of my defaults (marked as satisfied etc)
    LONG LONG LONG process - but keep at it
    got 25% deposit together
    Mansfield Building Society have been great
    It went to the mortgage executive first - who said yes to proceed
    Spoke with mortgage advisor at Mansfield who was really helpful
    Submitted full app
    They checked through it first - initial underwriter - yes to proceed (£199 fee requested)
    Paid and then just got a phonecall this morning to say yes - subject to employer reference (been here 12 years) and proof of deposit
    They did question quite a few things on bank statements - if things on statement don't match up to credit file then they will ask
    My credit score is low - I have about 15 creditors who were part of my BR - so as I say took a long time to clear up - battles - big battles!
    Was worth it
    I also took some advice of Dave Ham - thank you! - if i ever need a mortgage broker in future I know exactly where to turn to

    There is hope - just be upfront and make sure you have the deposit and that your bank account adds up!

    I'll let you know how things progress - but its now going through to the survey stage!

    • droiderm
    • By droiderm 27th Sep 12, 3:17 PM
    • 712 Posts
    • 278 Thanks
    Good news, really please for you.
    25% is big, I don't have much chance of that anytime soon

    What kind of things do they question on the bank statements? And in what way might they not match up on the credit file?
  • colmac71
    25% is big but the apartment I'm buying is just under 70k
    In clearing up my credit files I did have an old Virgin/MBNA credit card that actually had a £2 credit on it - so when I closed the account they transferred it in to my account. The underwriter questioned that - and asked if that credit card was still open. They also questioned a couple of other payments - i.e I pay £40 in to another account every month - and I also have another regular payment - they were fine when I told them what it was for - but it's just to be warned.
    • droiderm
    • By droiderm 27th Sep 12, 3:42 PM
    • 712 Posts
    • 278 Thanks
    Great thanks . My 6 years are up in Feb so hoping i can get away with less than 25 percent !
    • tigerfeet2006
    • By tigerfeet2006 28th Sep 12, 10:46 AM
    • 13,804 Posts
    • 29,888 Thanks
    Thanks for the update, that's brilliant news. Hope the rest goes smoothly.
    The only stupid question is an unasked one
    I now live in a country that is 4 hours ahead of the UK so you may now find I post at weird times
    • fiveyearplan
    • By fiveyearplan 29th Sep 12, 8:23 AM
    • 10,071 Posts
    • 9,959 Thanks
    Wonderful news colmac. I went BR in April 2008 also but am still battling a couple of creditors in the clean up! I already have a mortgage but will need to remortgage in 2016. Thanks for sharing.

  • colmac71
    Hi All
    Just another quick update
    We moved in to our new apartment last Thursday
    Mansfield Building Society have been excellent
    I'm on a 2 year deal - variable 3.19%
    Best regards
  • Abbie1977
    Lorax - fab post. I pray that I get a mortgage soon! I was only discharged on 29.11.12!! But I would really like a buy to let mortgage on a small small place and rent it out just to get myself back on the ladder again while my earnings increase! you think that would be possible?

    I am also keen to hear who approved you in the end - a building society you said?

    Tinka 21 - I LOVE your little blue scary face at the bottom of your post! looks like I did on 29.11.11!!!!
  • GeorgeProsen

    I just wanted to share some positive news. I was declared BR in March 2008 and discharged 12 months later. I was certain I would never get a mortgage, or at least until the 6 years had passed. After reading this post, I had a renewed sense of hope and set about calling as many lenders as I could from the list The_Lorax kindly shared. I also set about cleaning up my credit file using the tips on this site and also those provided by Experian et al. It was hard work, and at times disheartening...

    ....But, last week, just in time for Christmas, I picked up the keys to my lovely new home.

    I secured a 2-year Fixed with 2.74% with a 75% LTV.

    If you put in the time, you'll find a lender that's right for you.

    Thank you to everyone on this forum, you gave me the positive attitude to make this happen for myself.

    • droiderm
    • By droiderm 29th Dec 12, 9:15 AM
    • 712 Posts
    • 278 Thanks
    Hi George can you share which lender it was?
  • subman
    Colmac and George.... the interest rates that you were offered look very competitive.

    Were those rates the best rates offered by those BS at the time, or were there some lower rates/terms that they wouldn't offer your because of credit history?
  • GeorgeProsen
    It was their best rate. I had been offered a much higher rate by Halifax because of my status. Theirs was around 4.9%. But I went with the YBS who gave me their advertised rate.

    Colmac and George.... the interest rates that you were offered look very competitive.

    Were those rates the best rates offered by those BS at the time, or were there some lower rates/terms that they wouldn't offer your because of credit history?
    Originally posted by subman
    • kalk
    • By kalk 21st Jan 13, 1:34 PM
    • 4 Posts
    • 0 Thanks
    Thanks for this Lorax. Very encouraging.

    Jan 13 see's me pay my final instalment of IVA (whoopee). The IVA isn't exactly BR but it is has still been challenge to manage.

    I've had an on going PPI argument which you kind of touch on in your thread. I thought you, or anyone else, may be able to give me some advise?

    My IVA was based on all unsecured borrowings, I do have a secured loan which was not considered as part of the IVA. The IVA company have been persuing all creditors for mis-sold PPI (I have a little bit back here and there) including the secured loan company.

    I think it is very bad form for the IVA company to pursue the secured loan company for a couple of reasons; mainly because it wasn't considered as part of the original IVA. This is going to be a big payout if / when it is finalised. The IVA company see this as a 'windfall'. I bloody well don't. I want to offset this 'windfall' against the secured loan [since it was that which got me into all of the trouble in the first place]

    As I said above, I pay the last IVA instalment this month. I have been advised that it will take 4 to 12 weeks to be discharged from the IVA. I very much doubt that the PPI will be settled within this timescale.

    Am I right in thinking that if I have been discharged, the PPI will come to me and not the IVA company??

    • droiderm
    • By droiderm 1st Feb 13, 12:02 PM
    • 712 Posts
    • 278 Thanks
    Following on from Lorax's brilliant post. I have been researching the lenders myself. Things have changed since Lorax's first post (some lenders have been swallowed by other lenders for example) and the criteria of lenders do change. The Halifax being one example who would lend to ex BR at some point last year, but don't anymore.

    I haven't fully completed my research, but maybe the following will help. There maybe errors, and some lenders may only lend in certain postcodes. Hope it's of use to someone.

    Coventry bs - discharged 6 years (excluding ftb)
    Dudley bs - discharged 6 years
    Ing direct - 6 years ?
    Hanley Econonmic - discharged 6 years repo not accetpable
    Leeds BS discharged 6 years no repo 6 years
    Market Harborough BS discharged for 6 years
    National Counties BS 3 years
    Newbury BS clean credit history 2 years - limited area
    Platform - 4 years non confirming product
    Skipton BS - normal decline
    Teachers BS - more than 5 years

    cumberland - 3 years
    ipswich - no adverse on 90%+ but bankruptcies discharged 3 years ago
    nationwide - yes, normally no for reposession
    Mansfield - 3 years?
    the melton - 3 years ok , but no defaults
    Nottingham BS- bank discharged 4 years
  • Bazza31
    Mortgages after Bankruotcy
    I declared bankrupt on 5/10/2007, I've had many many false hopes re getting a mortgage. Some lenders advertise they will loan after 3 years discharge, however, I always declare my bankrupty on applications but they decline because there are still defaults on my report pre bankruptcy, and were part if it, therefore I'm going around in circles. I have written to the creditors twice to remove the defaults but they refuse, they will drop off automatically on 5/10 this year. I have written and downloaded reports from Experian, Call Credit and Equifax and forwarded to brokers and lenders.
    My credit has been squeaky clean since BR, I earn 55k per year, have no debts, and have recently been accepted for a credit card.

    Any pointers or advise is greatly appreciated

    • foolishboy
    • By foolishboy 7th Mar 13, 6:31 PM
    • 320 Posts
    • 94 Thanks
    I declared bankrupt on 5/10/2007, I've had many many false hopes re getting a mortgage. Some lenders advertise they will loan after 3 years discharge, however, I always declare my bankrupty on applications but they decline because there are still defaults on my report pre bankruptcy, and were part if it, therefore I'm going around in circles. I have written to the creditors twice to remove the defaults but they refuse, they will drop off automatically on 5/10 this year. I have written and downloaded reports from Experian, Call Credit and Equifax and forwarded to brokers and lenders.
    My credit has been squeaky clean since BR, I earn 55k per year, have no debts, and have recently been accepted for a credit card.

    Any pointers or advise is greatly appreciated

    Originally posted by Bazza31
    Complain to the ICO about them not updating your files correctly, they have to.

    What deposit do you have? This is just as important as what shows on your file.

  • smoty
    PPI after 3yrs since BR
    The technical term you are looking for is "asset after the event".

    There is a 36 month period post BR (not discharge) in which the OR can investigate any assets which you have aquired. It is up to you to prove that none of these assets existed pre BR.

    Once beyond that 36 month period you're free and clear.

    If the OP was was BR in 2005 then anything beyond 2008 is free and clear.

    If the OP claimed back the PPi after this three year period, it doesn't fall into the category of assets after the event.
    Originally posted by Alan M

    Hi does anyone know if this is correct? i've read on here that any PPI claim from loans included in BR are for the OR to deal with and claim as an asset. However this post suggests that after 3 years we would be free to claim it. Hadn't considered claiming before as assumed any monies would go to creditors and probably rightly so! but received a letter from First Plus PPI tracing team today asking for us to confirm our details. BR was Nov 2009 have been discharged since April 2010 and finished payments to OR Dec 2012. Any advice welcome - thank you
    Sort Myself Out This Year (hopefully)
  • angel1987
    hi we are considerting buying a house as parents have agreed to help with deposit, my partner was declared bankrupt in march 2011, and discharged march 2012. could we go for a new buy scheme? or would it be hard to get mortgage on that? what sort of % deposit would we need?

    please help
    • droiderm
    • By droiderm 4th Apr 13, 4:51 PM
    • 712 Posts
    • 278 Thanks
    Been discharged just over 5 years now.
    I also had a reposession as part of my BR.

    Way beyond my expectations I have now a DIP for a 95% NewBuy mortgage !! Long way to go yet, but didn't expect it to get this far. It did take them over 3 weeks to say yes though.
    Last edited by droiderm; 04-04-2013 at 4:54 PM.
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