Bankruptcy With A Mortgage UK

By Kristian Derrick

Last Reviewed: 8th February 2024

Contrary to belief, it is possible to get a mortgage even if you have been declared bankrupt and had your house repossessed in the past.

Although many mortgage lenders will decline applications from bankruptcy clients, there are lenders in the market that are more understanding and will happily consider you for a mortgage.

However, do expect to front a larger deposit to qualify. Lenders will look at your personal circumstances including your credit history when making their assessment.

A record of bankruptcy shows that you present a higher risk to the lender and as a result, some may decline the application at this point.

You can also expect to be offered mortgage deals with higher interest rates.

How long after bankruptcy can I get a mortgage?

During a period of bankruptcy, it isn’t unusual to have restrictions imposed on your borrowing.

Bankruptcy terms dictate that you cannot apply for a mortgage until you have been officially discharged. This usually takes up to 12 months depending on the court’s decision.

The more time that has elapsed, the more chance you have of a lender approving you for a mortgage.

Post-bankruptcy, the point at which you will become eligible to apply for a mortgage differs lender to lender.

If you apply for a mortgage immediately after the point of discharge then you will need to meet very strict criteria, have a substantial deposit, and find yourself subject to higher fees and rates.

As more time passes, the bankruptcy becomes less relevant from the perspective of a lender.

After 4 or 5 years, a lender will most likely see you in the same light as everyone else but more so if your credit history has been clear of any issues since discharge.

You will also find that more lenders in the market will consider an application at higher loan to value rates, the longer you have been discharged.

For example, if you have been discharged over 4-5 years and have kept a good credit record, you may be able to borrow up to as much as 90-95% LTV. If eligible, these lenders may be able to offer you more competitive rates too.

If you have been recently discharged, then you will find it significantly harder but can still obtain a mortgage though at least 25% deposit will be required in a lot of cases.

If you’re unsure about your eligibility, please get in contact with one of our specialist advisors to discuss your situation.

Tips for applying for a mortgage after bankruptcies

If you are in a position whereby you want to apply for a mortgage post-bankruptcy, then there are a few things you can do to help get approved:

  1. Check your Credit Reports

First and foremost, we recommend checking your credit score. It is important to regularly check your credit file.

This is where all your financial irregularities are recorded, and it will give you an overall picture of your financial profile as seen by lenders.

Some credit files contain discrepancies which can be detrimental to your mortgage application.

It is important to check that dates etc are accurate on your credit file, especially where bankruptcy is listed.

Irregularities like this can be a result of basic admin error but could make your mortgage approval very difficult.

Fundamentally, it can be the difference in being accepted or declined for a mortgage after bankruptcy. 

  1. Check your Eligibility

Once you have checked and corrected any discrepancies on your credit file, it’s time to check if you are eligible to apply for a mortgage.

Some lenders can decline applications even after they have passed a credit check, based on the bankruptcy.

This is where specialist lenders come into the equation. Contact us to speak to an expert bankruptcy mortgage adviser today.

  1. Rebuild your Credit Profile

One of our financial advisors can guide you to take the steps you need to repair your credit file, as offer you advice on mortgages with bad credit.

National Hunters Report

If 6 years have passed since your discharge, then relatively speaking there should be no trace of bad credit on your file.

Most assume that it is therefore easy to apply to any lender and get accepted for a mortgage, but this is not the case. This due to the National Hunters Report.

The National Hunters Report is a register that contains the names of anyone ever made bankrupt in the UK, even if you were discharged over 6 years ago.

So, although you may get through a bank credit check at the initial application stage, you can be declined at a later stage when the Hunters Report brings your bankruptcy to light so ensure that you declare this.

Although this can be very disappointing and frustrating for many applicants, fear not, there are still several lenders that may consider your application at this point.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

Credit behaviour since the bankruptcy

If there are other credit issues on your credit file before the bankruptcy such as arrears, defaults, late payments, CCJs or a debt management plan, then the bankruptcy itself should effectively wipe them off and they should appear on your credit report as settled.

The credit file is reset and after a year passes, discharged customers can attempt to rebuild their credit profile from scratch.

However, if you have experienced credit issues after the bankruptcy, lenders will consider you a high risk.

Lenders will want to see that you have successfully learned to manage your finances in a responsible manner since the bankruptcy.

It is important that your bankruptcy default is marked up to date on your credit file before making your application.

Which lender can I apply to with bankruptcy on my file?

There are a few discharged bankrupt mortgage lenders in the market.

Whilst some are mainstream lenders offering high rates and overlooking discharged bankruptcies of over 4 years, there are other specialist lenders who can take on applications for bankruptcies discharged less than 3 years ago but these do tend to have higher rates and fees attached to them.

Get in touch with one of our experts and we will help establish the best lender for you.

Can I get a buy to let mortgage after bankruptcy?

Depending on your circumstances, it may be possible for you to obtain a buy to let mortgage if you have been declared bankrupt in the past.

However, you will often need to meet the criteria outlined below:

  • have saved a deposit of over 15% (amount varies).
  • have a personal income.
  • have been discharged from bankruptcy for at least 3 years.
  • have a clean credit file since bankruptcy.
  • own at least one other property.

Even if you don’t meet the criteria above, we may still be able to help.

A mortgage after bankruptcy requires specialist knowledge.

Remember, you can contact our expert advisors for advice.

I had an IVA. Can I still apply for a mortgage?

Just like bankruptcy debt, IVAs can come as a deterrent to many lenders but there are specialist providers who focus on applications containing credit issues.

These providers tend to take a more formative view of your mortgage application.

Just like other issues, IVAs stay on your credit file for 6 years, however, if the debt has been listed as settled for more than 3 years, there are a small number of lenders who will accept an application from someone with a current IVA.

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