Mortgage After Bankruptcy

Explore your options in getting a mortgage after bankruptcy and how a specialist bad credit broker can help you

Firstly, is your bankruptcy discharged or still registered?

Home Bad Credit Mortgages Mortgage After Bankruptcy
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: March 15, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

March 15, 2024

Here we have covered all the essential details you need to know about getting a mortgage post-bankruptcy.

You’ll learn about potential time constraints, how to kickstart your application, and where to find the expert advice you’ll need during the process.

Can you get a mortgage after filing for bankruptcy?

Yes, it’s possible, but your application is unlikely to be straightforward. Most lenders won’t be willing to offer a conventional mortgage to an applicant in the immediate period after bankruptcy.

However, there are some lenders open to considering applicants with this type of credit issue – depending on when it occurred – and using the services of a skilled mortgage broker is the best way to find them.

How to get a mortgage after a bankruptcy

Your first step should be to find a mortgage broker who specialises in bad credit as this can significantly improve your chances of mortgage approval and getting a competitive deal.

Make an enquiry with us and we will match you with an advisor whose area of expertise is bankruptcies.

Your handpicked mortgage broker will guide you through the following steps:

  • Downloading your credit reports: You can do this yourself by accessing a free trial, and with a broker on your side, you can optimise and repair your credit files ahead of your application.
  • Finding lenders who will approve you: This can be difficult without the help of an expert given that bankruptcies are considered severe and many mortgage lenders won’t approve anyone who has one on their file. The right mortgage broker will know exactly which mortgage providers to approach.
  • Securing the best rate and filing your application: Mortgage brokers often have access to exclusive deals thanks to the deep working relationships they have with lenders. They will also give you a hand with all of the paperwork, potentially saving you time as well as money in the long run.

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Mortgage lenders available

Here are a few examples of mortgage lenders who accept applications from bankrupt borrowers…

  • Nationwide – open to the possibility, but it must be at least 3 years since you’ve been discharged from bankruptcy. And, the application would need approval from a senior underwriter.
  • Skipton Building Society – typically won’t accept applications, but it will consider referrals from trusted brokers if the bankruptcy has been discharged for at least 3 years.
  • Aldermore – the mortgage products you might qualify for will depend on whether you’ve been discharged from your bankruptcy for 2, 4, or 6 years (providing there are no missed payments or adverse within those timeframes).

Your lending options will be unique to your particular credit position if you’re an ex-bankrupt borrower.

So, if you want to see your full range of choices, using the services of a specialist broker is your best bet.

What rates to expect

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Last updated May 2024

Note: Mortgage lenders are constantly updating their eligibility criteria – particularly during periods of economic instability – so, these details can be subject to change at any time. 

How long should you wait before applying for a mortgage after bankruptcy?

It will depend on the lenders you approach. There will be a small number willing to discuss mortgages as soon as you’re discharged from bankruptcy. But, most may not consider your application until 12 months after you’ve been discharged. The rest may require a number of years to have passed.

The majority of lenders who will consider your mortgage application will request that it’s been 3 years (36 months) after you’ve been discharged. The discharge process normally takes 12 months and the bankruptcy itself will show on your credit file for six years from when it was initially registered.

Below you’ll find a summary of your mortgage prospects based on the amount of time that has elapsed since your bankruptcy was discharged.

Time since bankruptcy was discharged Chances of mortgage approval
After 1 year You can apply but you’ll be limited to specialist bad credit lenders whom have higher rates and deposit requirements.
After 2-3 years The number of approachable lenders will increase and you will have access to a wider range of rates and deals.
After 4-5 years Your choice of rates, deals and lenders will become gradually similar to that of borrowers with clean credit during this period. It may be possible to get a mortgage with a 10% deposit or less.

Whatever length of time you wait, you’ll usually have to prove a clean record of credit within that period. So, if you wait until after six years to apply, you may be in a position to rebuild your credit and apply for a standard mortgage.

But, waiting this length of time may not be practical or convenient if you want to get a mortgage soon after bankruptcy.

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Mortgage eligibility criteria and affordability

There are some areas unique to people who are applying for post-bankruptcy mortgages. But, most of the same overarching methods for calculating affordability and determining eligibility could still apply, except that you’ll face stricter requirements.

How your bankruptcy will be assessed

The mortgage lender will look at the following aspects of your bankruptcy when assessing your eligibility:

Reasons for Bankruptcy

Some lenders will want to have a good understanding of the circumstances that led to your bankruptcy. This can mean viewing records and reviewing evidence of the surrounding details before considering your application.

Length of time

How long you’ve been discharged can determine the products and terms you can access. So, lenders may offer a mortgage, but whether you’ve been discharged for 1,2,3,4,5, or 6 years can make a big difference to the terms and rates.

Debt history

Certain lenders will want to make sure that you have no residual debt from bankruptcy. They will also want to take a deeper dive into your finances. This involves looking closely for missed payments on loans or credit cards, along with any mortgage defaults.

General eligibility criteria

Lenders will also review the below factors to form a complete picture of your eligibility for a mortgage after bankruptcy.

Affordability

This will determine how much you can borrow. Applying for a mortgage after bankruptcy could prevent access to higher-income multiples. The average multiple used is 4-4.5x your salary. But, poor credit due to a severe issue like bankruptcy will likely make it difficult to reach higher than this as the pool of lenders willing to consider your application is smaller.

Deposit

The amount of deposit you’ll need will depend on the time that has passed since the bankruptcy occurred. The table below provides a guide to the size of deposit mortgage lenders could ask for, based on the number of years since the bankruptcy was discharged.

Time since bankruptcy was discharged Amount of deposit required*
1 year 40% (minimum)
2 years 30%-40%
3-4 years 20%-30%
5-6 years 10%-15%
6 years or more 5%-10%

*This table should be used purely for guidance purposes. Each mortgage lender will assess the deposit requirements for these types of applications using their own internal eligibility criteria. A bad credit mortgage broker will be able to offer more advice on the size of deposit which may apply based on your own specific circumstances. 

Employment

A history of bankruptcy means that a few lenders will have tighter rules around your current employment. In some cases, they will want to see at least 12 months of continuous employment, which is more than for standard applicants.

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How to improve your chances of getting a mortgage after bankruptcy

You can boost your chances of securing a mortgage by doing the following:

  • Check your credit reports: You can access them through a free trial where you can see if they are up to date. Challenging inaccuracies and having outdated information removed could help increase your mortgage options.
  • Clear any debts you’re in a position to pay off: This can make you more creditworthy and potentially allow you to borrow slightly more.
  • Wait until your situation improves: Waiting could mean that your bankruptcy is less of an issue due to its age, plus using this time to save up for more deposit.
  •  Use a bad credit mortgage broker: The knowledge and experience of helping customers with bankruptcies and a network of lender contacts can significantly increase your chances of securing a mortgage and getting a favourable rate.

Getting a buy-to-let (BTL) mortgage after bankruptcy

This can be possible, but a standard BTL mortgage usually comes with bigger deposits and stricter LTV requirements.

With those that will consider applications, you’ll usually need to have been discharged for at least 3 years. Yet, a small number will still be open to discussing bad credit BTL mortgages if you need one less than 36 months after bankruptcy.

Can you apply for government home ownership schemes?

If you have been through a bankruptcy process, this won’t necessarily disqualify you from government home ownership schemes such as Shared Ownership, Help to Buy, Right to Buy, and the Help to Buy Equity Loan.

For most of these schemes, credit checks aren’t used. But, you’d still need to qualify for a mortgage to be a suitable candidate for a government-backed home ownership scheme. So it’s still worth getting advice from an expert mortgage broker who understands bad credit. Because, they can help you secure a home loan, allowing you to take advantage of government support.

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Tips for rebuilding and repairing your credit

One of the best things you can do after bankruptcy is work on rebuilding your credit.

This can be a great tactic to use while you’re waiting to become eligible for more mortgage deals, here are a few ways you can do this:

  • Ensure you’re not making any late payments by paying any bills on time and in full.
  • Keep your reliance on credit at a manageable level
  • Avoid using unplanned overdraft services with your bank.
  • Register to vote on the electoral roll.

One of the easiest ways to see where improvements can be made is to download all your credit reports. And then, get your broker to go through the results with you to help understand them, spot mistakes, or evaluate areas you should focus on improving.

Speak with a broker who has experience arranging mortgages following bankruptcy

If you have adverse credit or have gone through the bankruptcy process, you can still get a mortgage. But, it will be more difficult, and the best way to find a suitable lender is by using a specialist broker who has lots of experience with bad credit applicants.

We offer a free, broker-matching service. This means we’ll quickly assess your credit situation and then pair you up with an expert advisor that best fits your needs.

Just call 0808 189 2301 or make an enquiry. We’ll set up a free, no-obligation introductory call between you and your ideal bad credit mortgage broker today.

Maximise your chance of approval with a broker who's a specialist in mortgages after bankruptcy

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FAQs

This can be possible. With most bankruptcy payment plans, you’ll normally make monthly payments to creditors for 3 to 5 years. If you want to pay it off earlier than the pre-agreed timeframe, you’ll need to apply for court approval and notify the creditors in advance.

If you own your home, the receiver may want to sell it to cover some or all of your bankruptcy debts. Even though unsecured debts may not be linked to your home, sometimes it can be worth releasing equity to pay off debt. However, it’s always worth getting professional financial advice before making any decisions.

This order essentially cancels the original bankruptcy as if it never took place. An annulment can take place if you decide to cancel your bankruptcy. If the court agrees with your application, they’ll make an annulment order. An annulment could greatly improve your chances of finding a competitive mortgage. However, your underlying credit issues will still need to be addressed.

A bankruptcy will remain on your credit files for six years, or until it has been discharged, if that takes longer.

Even if your bankruptcy has disappeared from your credit files, mortgage lenders might ask you whether you have ever been bankrupt in the past.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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