Bankruptcy Mortgages - Get A Mortgage After Bankruptcy Discharge
By Ivan Cuxeva Jr
In today’s world, bankruptcy mortgages are not uncommon. According to figures from the government’s Insolvency Service, in quarter three of 2007, there were 26,072 individual insolvencies in England and Wales. This was made up of 15,833 bankruptcies and 10,239 Individual Voluntary Arrangements (IVAs) – where you are still unable to borrow but you keep your property.

All of these people could be candidates to apply for bankruptcy mortgages. However, seeking out a bankruptcy mortgage at a time when you are clearly the most financially vulnerable is nothing to be taken lightly. That’s why it’s very important that you seek advice from an independent broker that specialises in this bankruptcy mortgages first, like The Mortgage Broker Limited (TMBL).

Why would I need to look at bankruptcy mortgages?
After you have been made bankrupt, you may be discharged (freed from obligations under the bankruptcy order) after one year, although a bankruptcy will stay on your credit file for at least six years. Your credit file is held (but not determined) by one of three credit reference agencies in the UK; namely Experian, Equifax and CallCredit and lenders will refer to this file before agreeing to lend to you. Bankruptcy mortgages can be your only option during these years as mainstream lenders – that don’t offer bankruptcy mortgages – will not offer you a loan. Unfortunately, this is still the case if the bankruptcy occurred through no fault of your own; for example, your business folded or you got divorced.

How do bankruptcy mortgages work?
Bankruptcy mortgages are also known as ‘heavy subprime’ mortgages. In other words, they fall at the bottom end of the subprime spectrum; by contrast you could be at the top of this spectrum if you had just missed a couple of credit card payments.

What’s the difference between standard and bankruptcy mortgages?
The main point of difference between standard and bankruptcy mortgages is their cost. Depending on when you were made bankrupt and under what circumstances, bankruptcy mortgages can be eye-wateringly expensive – to the point where it may not make sense to get one. This is the kind of information a broker that specialises in bankruptcy mortgages can help you with. The other main difference is that – as you are a maximum risk in the eyes of the lender, bankruptcy mortgages may require a larger deposit than on mainstream deals, as well as come with some hefty upfront fees and restrictive tie-ins.

Where can I get bankruptcy mortgages?
Even if you wanted to search for bankruptcy mortgages yourself, you may find that many of the specialist lenders that offer them only accept applications through a mortgage broker. This is because lenders must be very careful to protect themselves when it comes to bankruptcy mortgages, and taking an application through a specialist broker like TMBL means the risk has already been assessed and the relevant information has been packaged appropriately. So, when it comes to bankruptcy mortgages it makes sense to go to a broker for access to deals and well as to get the best one available.