How much can I borrow post bankruptcy

How much can I borrow after Bankruptcy?

Since 2009 and the financial crisis, mortgage companies have had to make their lending criteria more robust amidst the accusations from some quarters that irresponsible lending was partly to blame for the crash. The regular income that you can prove is what your scope for borrowing will be based on, typically on the basis of it being 5 times your self employed or PAYE income.

What About After Bankruptcy?

The same basic rules still apply after your bankruptcy has fallen off of your credit file (usually in 6 years), but the chances are that if you’ve only recently begun enjoying a clear credit file, your score will be pretty low. This puts your application into the slightly complicated category, but it shouldn’t affect how much you can borrow too much, though you could be looking at a figure closer to 4x your gross income.

Another factor that can boost your gross income figure is if your partner, husband or wife also works, as their income can be included in a joint application. Mainstream lenders might not give full weight to the 2nd income, but it will certainly increase your base figure.

And If This Isn’t Enough?

Unfortunately, if you’re applying via the traditional route and your combined incomes don’t total the amount you need, there won’t be much more you can do. However, you shouldn’t despair, as there are other routes you can take that will involve the use of more forgiving, less immutable lending criteria.

At Niche Mortgage Info, the mortgage brokers we work with have access to mortgage deals that take your whole financial picture to be considered rather than just your basic gross employed income. Should you be a company shareholder or a company director, any income derived from these sources will also be included in the calculations.

Raising Your Credit Score

If you’ve been discharged from bankruptcy within the last 6 years (or even before that), there’s a more than average chance that you will have a less than perfect credit score. If so, there are steps you can take to help speed the process up. In principle, the longer it’s been since your bankruptcy was registered, the less trouble you’re going to have getting a good deal on your mortgage.

For more information on boosting your credit score, take a look at our post-bankruptcy credit file clean up page and to see how much you could borrow speak to a broker.

Self employed and bad credit history mortgage

Are you Self Employed but also have a less than perfect Credit History?

The sad fact is that most people who are self employed and also have a less than perfect credit history often dismiss the idea of getting a mortgage, deeming it to be an impossible dream. Far from being out of the question, mortgage deals are available to people in this situation, so long as the right preparations are made before applying.

A specialist broker can help to guide you through the application process and ensure that you provide the necessary information that can really make the difference between success and failure.

To be as prepared as you can be, you should make sure you have the following.

  • Tax Overview (minimum 1 year)
  • Tax Calculation (most recent year)
  • Company Accounts* (minimum 1 year full accounts)
  • Projected Accounts for the current tax year* (these may be requested to be supplied by your accountant if you have less than 3 years history)
  • Current Tax year Salary/Dividend projection* (these may be requested to be supplied by your accountant if you have less than 3 years history)
  • Current Tax year projected accounts (these may be requested to be supplied by your accountant if you have less than 3 years history)
  • 3 Months Personal Bank Statements
  • 3 Months Business Bank Statements
  • 3 Months Wage Slips (if applicable)
  • Credit Reports from the 3 main agencies – More info
  • IVA completion certificate (if previously in an IVA)
  • Bankruptcy discharge (if previously bankrupt)

*Only applicable if your business operates as a limited company

Since the laws in the UK regarding responsible lending came in to force, all mortgage lenders want to see is that any mortgage they offer is affordable to you. With a specialist brokers help and the right kind of proof, there’s no reason why you shouldn’t be successful in your application.

To see if you qualify, talk to a specialist mortgage broker who will understand your unique situation.

Will it affect getting a mortgage in the future if we sell and rent now after completing IVA early?

Contrary to popular belief, there is no way to remove an IVA from your file quicker. This means that even if you complete your IVA early, it will still have to remain on your file for six years. There is no getting around the fact that your IVA will be on your credit score for six years, so selling your home and moving to rented accommodation can have future implications for getting a mortgage.

The first thing to consider is that an IVA will be visible on your credit file when you move to private rented accommodation. Some landlords and letting agents look at credit scores as part of their reference checks. They might choose not to rent to someone with an IVA for fear of missing out on rent.

When it comes to purchasing a home again, securing a mortgage might be more difficult. Some lenders will automatically rule out borrowers if they have an IVA on their credit report. Others might be more inclined to lend to you, but you may need to provide a larger deposit to reduce the risk to the lender.

If you do decide to sell your property and rent, it might be easier to wait until the IVA has been removed from your record before you apply for another mortgage. During this time, you can start to rebuild your credit score through responsible borrowing. It’s important that you only borrow from responsible lenders as some will target people with IVAs in order to sell them more expensive lines of credit.

Mortgage With Satisfied CCJ On File

A lender can decide to take legal action against a borrower if they consistently fail to pay back their debts. If you are taken to court and issued with a CCJ, you will need to pay back the debt in full, or a portion of the debt by agreement. This judgement will be recorded on your credit file for six years unless you pay back your debt before the CCJ is issued.

In the past, people with poor credit and CCJs could secure bad credit mortgage or remortgage. Since the credit crunch and reform of the mortgage industry, lenders have been forced to become more responsible. As a result, getting a mortgage with a satisfied CCJ on your file has become a little more difficult.

Many high street lenders will reject people with CCJs and defaults on their file as they view them as high-risk borrowers. Others may accept your application but will request a higher deposit or offer a higher interest rate. This can mean buying a house becomes much more expensive.

If you have a CCJ on your file and would like to secure a mortgage you have two options. You can either wait six years until the CCJ drops from your credit report and start building your credit again, or you can shop around. Your credit report is just one part of the whole picture that lenders will consider when making a decision.

There are steps you can take to make yourself a safer choice, including securing a bigger deposit of around 20-30%. The more deposit you can provide, the better. You can also shop around and try niche mortgage providers who may be more inclined to work with borrowers with poor credit histories.

Joint mortgage after finishing IVA?

Getting a mortgage after completing an IVA can be more difficult but it isn’t impossible. If your partner has a strong credit report, this might be just the thing needed to assure mortgage providers that you are a reliable borrower.

An IVA is a legal agreement between you and your creditors to freeze interest and pay back what you owe over a fixed period of time. During this time, you will not be able to take on any new debt and will have to stick to the terms of the agreement. As it is an Individual Voluntary Agreement, these cannot be combined between two people, such as a couple. This means that if only one person has an IVA and you are thinking about getting a joint mortgage, it might not be as impossible as you first thought.

Time heals all when it comes to credit reports. The IVA will only be visible on your record for six years. If your IVA lasts for five years, it will still be visible on your credit report for 12 months after you have received your IVA Completion Certificate. In many cases, you can simply wait until after the IVA has dropped from your credit report and then begin building your credit score again.

If you are keen to get a joint mortgage sooner, there are steps you can take to make this more likely. If your partner is able to afford the mortgage on their own, the simplest step may be to simply have them submit the application. If you would both like to be listed on the mortgage, you can approach niche mortgage providers who specialise in mortgages for people with adverse credit. Securing a larger deposit can also help to increase your chances of being able to acquire a mortgage.

Is there any way a mortgage provider could find out that I have a pending CCJ hearing?

A creditor can decide to take action against you if you are struggling to repay your debt to them. They will inform the courts that they plan to take legal action, and if upheld, the court will issue something known as a County Court Judgement. This is a legally binding order from the court to repay your debt or a smaller portion of your debt if it is unaffordable.

If you are able to repay the debt in full, the CCJ will not be issued and your credit score will not be affected. If you cannot repay the debt in the required time, you will be required to stick to a payment schedule. The CCJ will appear on your credit report for six years, even if you pay it back early.

For those with a pending mortgage application, this can lead to a difficult situation. If you are disputing the debt or if you plan to pay off the debt in full before a CCJ is issued, there is no reason a mortgage provider would know as it is not listed on your credit file. However, this can be risky. For example, if you are unable to repay the debt as planned, or if the dispute does not go your way, this could impact your mortgage application further down the line.

If you have secured a mortgage in principle, there may be more extensive checks further into the application process that could put the brakes on your mortgage. You may also be asked to sign documents which state that there are no pending hearings, and so you would be committing fraud to go ahead with the application before the CCJ is settled. The best thing to do is to wait until you know the outcome and then go forward with the mortgage application when your credit report is clear.

Is it impossible to obtain a mortgage until 6 years after IVA finish date?

An IVA is an abbreviation for an Individual Voluntary Arrangement. This is a legally binding agreement with your debtors to pay back a portion of your debts over a fixed period, usually five years. An IVA is often a better solution for the debtor and creditor as it is an alternative to bankruptcy.

A record of your IVA will remain on your credit report for six years, and this can have an impact on your ability to take on further debt, including a mortgage. Even if the debt it affordable with your current circumstances, the presence of an IVA can make some lenders concerned about your ability to pay back debts on time.

The IVA will be visible on your credit report for six years, so this could be a further 12 months after you have received your IVA Completion Certificate. In many cases, it is best to wait until the IVA has dropped from your credit report before trying to secure a mortgage. However, there are some instances where you could secure a mortgage before the IVA has gone from your record.

Not all lenders approach this issue in the same way. Some lenders will automatically rule out an applicant with an IVA, while others will consider them if they can provide a bigger deposit, for example. If you are determined to secure a mortgage with an IVA on your record, the first step should be to look at your credit report across all three credit reference agencies.

These are Callcredit, Experian and Equifax. Once you have a clear view of your position, you can approach niche mortgage providers to see if any of them will consider your application.

Getting a mortgage after completing IVA?

Getting a mortgage after completing an IVA may be more difficult, but it is not impossible. An Individual Voluntary Agreement (IVA) is a way of managing your debt and is a legal agreement between you and your debtors, usually with the help of an insolvency practitioner. An IVA will stay on your credit report for six years. If your IVA is a five-year arrangement, this will mean that it will stay on your record for one year after completion.

Getting a mortgage with an IVA or remortgage with an IVA, still on your credit report is more difficult. You will need to approach a niche mortgage advisor and you may need to supply a bigger deposit. If you have an IVA on your credit report and you are rejected for a mortgage, don’t assume this means that all mortgage providers will reject you. Sometimes, you just have to find the right lender.

In many cases, it is best to wait until the IVA has dropped from your credit report before getting a mortgage. This is because you are more likely to be offered a better interest rate. With the IVA removed from your credit report, you will be able to rebuild your credit and give lenders confidence in your ability to pay back your mortgage.

Rebuilding your credit report after an IVA is difficult but not impossible. The first step is to get a clear understanding of your position. You can do this by signing up to view your credit report with the three main credit checking agencies. These are Equifax, Experian and Callcredit.