how to get a mortgage after bankruptcy

A question about : how to get a mortgage after bankruptcy

You too can get a mortgage after bankruptcy.
I have just bought a house for Ј250k after being declared bankrupt in April 2005. Conventional wisdom that Bankruptcy ends your chances of ever getting a mortgage is just not true but there are some golden rules to follow.
If you want to know how I did it, read on.
Golden Rule One – Sort your life out.
I’m not here to judge, I went bankrupt through a combination of bad luck, greed, laziness and burying my head in the sand. The important thing is learn from your mistake.
Since then my wife and I have been pretty much perfect customers, pay all your bills on time, live within your means. When you can get a credit card use it but pay it off every month. I used mine just for petrol and paid in full as soon as the bill came in. when the time is right apply for catalogues and do the same. You need to rebuild your credit footprint by getting the low end low value lending and making the most of it.
We owned a house and my wife had to get a loan from the bank to buy out my half of the interest in it. We scrimped and paid that off in half of its planned term. It was not easy but it hugely increased her customer score at her bank.
Likewise I left lots of money in my account as long as I could to look like a stable character.
Do your life laundry; cut your outgoings, find bargains, it all helps. Check your credit file with a fine tooth comb. Make sure that each lender shows your account as settled or partially settled and with the settlement date as the date of your bankruptcy discharge. I had several that had either not put it as settled or had it showing as settled years after discharge. This has the effect of making you look as though your money troubles have continued since bankruptcy and will make any financial institution give you a very wide berth. It can be difficult to get it corrected but persist using all the advice on the rest of this site as it is essential.
Final tip here if you owed a lot of money when you went bankrupt you probably had PPI. I had a loan from my bank pre BR which they said I had to take out PPI for or they wouldn’t let me have it. When I complained to the Financial Ombudsman I got Ј3,000 back which enabled me to replace my car when it died without having to borrow money.
So rule one, sort your life out. If you haven’t done this, don’t even bother with the rest.
Golden Rule Two: Persist
I went to a broker on a personal recommendation; someone who purported to be experienced in my kind of case. He told me I had no chance and would have to wait at least another year and even then wouldn’t be able to afford a house at more than Ј200k. (His name was Jon Shaw from Positive Solutions – don’t even bother)
A good friend of mine told me not to give up but to phone around mortgage companies myself. I phoned as many as I could find. In the end I phoned 84 different mortgage providers and 18 said that they would consider me. I have listed them at the bottom but you have to do it for yourself. They judge it on individual circumstances and they change their policies all the time.
Golden Rule Three: Do your research
At this stage don’t give your real name (you don’t want to leave footprints and some of them will want to do a soft search on you.) but be completely honest about everything else. First explain how long you have been discharged and your position and ask whether they will consider you. If they say yes then you need to know what their lending policy is. Some still do multiples of income, most say they base in on affordability the reality is that they are all different. Some will give you a formula, some will ask you for your details and then say how much you can borrow without telling you how it is worked out, some won’t go that far without running a credit check.
The next stage is to ask how they assess customers. Some do a hard computerised credit score. This is likely to be a problem for you. Firstly you have an adverse history so it will probably knock you out, second it will record a visible search on your file. If you apply for a mortgage and another lender searched you two weeks ago then the second lender can be pretty sure the first one said no and mark you down for it.
Other lenders use a combination of scoring and other techniques. If you have an account with a lender already they will take into account your customer score which is internal to that institution.
For me, the best bet was to go with a building society that didn’t score at all. Instead they got full credit files for myself and my wife and went through them with a fine tooth comb. They also went through bank statements, payslips, everything. They raised lots of queries, wanted to know what certain payments were for. The bottom line is that a human being came to a judgement about whether I had sorted my life out and decided I had.
Everyone is different though and so what worked for me might be different for you. Try to get the people from the lenders talking, explain what you are doing. Some will be friendly, some downright snooty and rude. The friendly ones, however, can give you some really useful information.
Don’t go with the first one you find. Go through all the lenders you can find and then make us a short list. Prioritise them. If necessary ring round again and get further details.
Ultimately you will get down to a handful that look really promising. Then decide who you are going with. It can still break down even at this point. I didn’t get a mortgage with the provider at the top of my list and you might not either.
Golden Rule Four: Don’t ever give up!!
You are then faced with an agonising time of sending information back and forth but hopefully it will be worth it.
I moved in October 2010. I earn about Ј45k a year. I bought a house for just under Ј250k on an 80% mortgage; the other 20% came from equity in the house I already owned. i'm now paying Ј1021 a month for my mortgage.
Getting a mortgage is not easy after a bankruptcy but if you get yourself sorted it is possible so don’t give up.
The lists of those I rang and those who said yes are below BUT EVERYONES DIFFERENT SO YOU HAVE TO DO YOUR OWN RESEARCH

If you want to know any more, just ask.

Good Luck!!
The people I rang were:
Royal Bank of Scotland
Cheltenham and Gloucester
Halifax
Manchester Building Society
Yorkshire Building Society
Abbey
One Account
ING Direct
HSBC
First Direct
nationwide Buiding Society
newcastle Building Society
Scottish Widows Bank
Barnsley BS
Cambridge BS
Chorley & District BS
Coventry BS
Natwest
Britannia
GMAC
Mortgage Express
accord
aldermore
alliance and Leicester Direct
Bank of Ireland (NI)
Bank of Scotland (Mortgages)
Beverley
BM Solutions
Buckinghamshire Building Society
Chelsea BS
Cheshire BS
Clydesdale Bank
Cumberland
Darlington BS
Derbyshire BS
Direct Line
Dudley BS
Dunfermline BS
First Active
Furness BS
Hanley Economic BS
Intelligent Finance
Ipswich BS
ITL Mortgages
Kensington
Kent Reliance BS
Leeds BS
Leek United
Legal & General Mortgage Club
Lloyds TSB
Loughborough
Mansfield
market Harborough BS
Marsden
Melton Mowbray
Monmouthshire BS
National Counties BS
Natwest
Newbury BS
Northern Rock
Norwich & Peterborough BS
Nottingham BS
Pink Home Loans
Platform
PMS
Post Office Ltd
Principality BS
Progressive BS
Saffron BS
Scottish BS
Shepshed BS
Skipton BS
Stroud Swindon BS
Teachers BS
Co-operative Bank
Mortgage Works
Tipton & Coseley
Vernon
West Bromwich Building Society
Woolwich (Barclays)
Yorkshire Bank
Bath investment and BS
Chesham BS

The ones that said yes were:
Norwich & Peterbororgh
Saffron BS
/skipton BS
Tipton & Coseley
Cheltenham and Gloucester
Halifax
Manchester BS
Yorkshire BS
Barnsley BS
Cambridge BS
Coventry BS
Clydesdale Bank
Dudley BS
Furness BS
Kent Reliance
Leeds BS
Leek United
Mansfield

Best answers:

• Thank you very much for your moral boosting advice
  My situation has some similarities. I have found much the same thing and have trawled through the internet and documentation too. I have never been bankrupt but have now been declined a mortgage several times causing bemusement and anguish.
  I will look at a few I have missed from your list at the bottom. But this is exactly the information and guidance I joined this site for.
  Thanks
  Stew125
• hi...and thank you for your informative contribution.
  Whilst I have achieved an age where a mortgage is really out of the question...I would like to suggest to the mods that this thread is awarded stickie status???
• How did you manage to keep the Ј3000, surely the OR was interested in this as it was a pre br loan?
• Thanks for the warm reception, I owe my currrent position to excellent advice from a good very friend and I just wanted to return the favour.
  In my experience (and I have had several pay-outs) you can keep money from a PPI complaint provided you have been discharged by the OR.
  I have had a company refuse to pay out as I had been declared bankrupt but when I took it to the Financial Ombudsman they wrote to the OR who (eventually) confirmed I could keep the money.
  It does mean (and I don't know if I' m allowed to say this) wait until you are discharged before you complain about PPI or you will lose it.
  Good luck and if anybody has any other questions I will try to answer them.
• Lorax a very big thanks for the post. This is something I have been thinking about over the past few months. I suspect I'm not likely to be in a postion to buy for at least two or three years, but its good to know that its possible!
• So basically you have built your new "life", by taking out large loans with PPI. Using the money to buy what you wanted, then after paying for a period of time going br. Then after a year claim back large amounts of PPI.
  It seems somewhere the OR has missedtis, but surely it is a credit before the br and should be given to the creditors.
• plus the PPi claim arose out of mis-selling on the part of the loan providers....
  or is the moral issue only to be aimed at us, and not them?
• PPI's are something you paid for and something you didn't need or probably want and was deviously sold to you. Why would you want to voluntarily give it up to them?
  It's all down the to OR at the end of the day. If he/she says you can keep it then you can keep it, simple as. I kept monies during mine and they were never even mentioned again by the OR, he simply wasn't interested.
  Thanks for the info, it's a great read for post bankruptcy. Everything is possible, including credit, so never give up.
• I thought that you had to declare everything to the OR or am I missing something?
• Many thanks for the thread Lorax. I will want to re-mortgage as soon as interest rates start to go up so find it very useful. I have a wonderful mortgage advisor who, I have no doubt, be able to get me a re-mortgage if there is one to be had, however I am only (nearly!) 3 years post BR so hoping that interest rates stay low as long as possible as I know every year post BR is beneficial!
• Form your figures above it appears you got a mortgage for at least 4 x salary, did you include any other income, go self cert etc?
  Please PM me if you don't feel you can answer in an open forum.
• You're SUPPOSED to declare everything, but not everyone does. It seems quite easy to do avoid declaring things as well. Either they are too busy or too dense or simply couldn't care less. Who knows?
• Thanks Lorax.
• Glad it all worked out for you! I'm also pleased to see Mansfield on your list as I used to work for them lol