Bankruptcy Mortgage Articles
If you are looking for a mortgage but you have been in a situation where you have previously been declared bankrupt this section of the site may well help. Here you will find links to our bankruptcy mortgage articles which explain the facts you need to know before making any kind of decision about which type of mortgage will suit your circumstances.
Let's start with the basic elements of a Bankruptcy Mortgage
Bankruptcy mortgages are mortgages intended for people who have had to deal with bankruptcy. With UK consumer debt now in the trillions, more and more people are turning to bankruptcy and individual voluntary arrangements (IVAs) as a way out of debt. This may help with some issues, but it is still considered a stigma on the credit record. Once you have been made bankrupt, the details of this stay on your credit report for six years, making it difficult for you to get credit of any kind, as well as making it difficult for you to get a standard mortgage.
However, the advent of bankruptcy mortgages means that people who have been made bankrupt can still get a mortgage. With interest rates changing and lenders offering new deals, bankruptcy mortgages offer an option for people who have had previous financial difficulties. Bankruptcy mortgages are part of the range of specialist mortgage products known as sub prime mortgages. Bankruptcy mortgages may also be called arrears mortgages, IVA mortgages, CCJs mortgages and bad credit mortgages, as well as many other terms.
As with other sub prime mortgages, the range of lenders who offer bankruptcy mortgages is limited, but is growing all the time. There are dozens of lenders and deals available for bankruptcy mortgages so having bad credit doesn't put you out of the frame. The deal you will get will depend on other adverse credit circumstances in your credit report. For example, if you also have mortgage arrears and County Court Judgements (CCJs) against you, these will also be considered.
With bankruptcy mortgages each set of adverse circumstances affects the interest rate that you pay. For example, when people apply for bankruptcy mortgages, lenders will have an interest rate that is a couple of percentage points higher than the rate for prime mortgages. However, they will then add more percentage points (called loadings) for arrears, defaults, CCJs, IVAs and so on. They may also add loadings for self certification and for other specialist mortgage products such as buy to let.
Whatever your circumstances, you don't have to worry about getting a mortgage. With bankruptcy mortgages, the key issue is whether you have satisfied the bankruptcy and how long ago it has been satisfied. These days, bankruptcy last for a year (even though it stays on your credit record for longer). Some lenders only ask that you have completed the year to qualify for bankruptcy mortgages; with others it is best to have satisfied the bankruptcy at least a year ago.
Bankruptcy mortgages may also be used as credit repair products for those who are looking to improve their credit status. If you pay bankruptcy mortgages properly, then after a couple of years you can move to a mortgage product with a better interest rate.
