At a glance
You can get a mortgage after bankruptcy, but will have fewer options.
You'll usually need a larger deposit and will likely pay a higher rate of interest.
There are things you can do to help repair your credit history.
You'll should find it easier to get a mortgage after six years, once the bankruptcy has been removed from your credit history.
Can I qualify for a mortgage after bankruptcy?
If you’ve been made bankrupt, you’re unlikely to be approved for a standard mortgage deal while the bankruptcy is still on your credit file.
This can also be true if you’ve had County Court Judgments (CCJs) against you. But that doesn’t mean you won’t be able to get a mortgage – if you can afford one.
Which banks lend to discharged bankrupts?
Many high-street mortgage lenders won’t lend to anyone with bankruptcy in their credit history.
Although a bankruptcy officially ends when you’re ‘discharged’ from your debts (usually 12 months after you were declared bankrupt), it will stay on your credit report for at least six years.
However, there are specialist mortgage lenders for discharged bankrupts who may be able to help you buy a home. The downside is that you’ll probably need a much larger deposit. And you’ll likely be charged a higher rate of interest than someone with a good credit score.
How soon after bankruptcy can I get a mortgage?
Some lenders will consider your mortgage application as soon as you’re discharged from bankruptcy. This usually happens after 12 months. But others might not consider you until you’ve been discharged for at least 12 months, if not for several years.
The longer you’ve been discharged and shown to have improved your credit record, the more likely you are to find mortgages for discharged bankrupts that offer a favourable interest rate.
But while bankruptcy remains on your credit file, you’re still likely to find it more difficult and more expensive to get a mortgage.
If you wait six years until your bankruptcy is removed from your credit file and then apply for a mortgage, you’ll hopefully have had the opportunity to build a good credit score. At this point, it could be worthwhile applying for a conventional mortgage.
Need to know
Make sure you have a free confirmation letter from the Insolvency Service to show your bankruptcy has been discharged. Request one from discharge.queries@insolvency.gov.uk
How much of a deposit will I need after bankruptcy?
If a bankruptcy is still showing on your credit history, lenders will want a much larger deposit than from a homebuyer with a good credit history.
How fast and how much you can save for your deposit may be the biggest limiting factor on how quickly you can get a mortgage.
The amount needed will vary among lenders and will also depend on your personal circumstances. But you can use this table as a rough guide.
Time discharged from bankruptcy | Estimated deposit needed |
|---|---|
Less than a year | 40%+ |
One year | 25-35% |
Two to three years | 15-25% |
Four to six years | 10-20% |
Six years | 5-10% |
On top of your deposit, you’ll need to budget for the usual fees, stamp duty and moving expenses.
Will I always have to pay a higher rate of interest on my mortgage?
Not necessarily. If you get a mortgage from a specialist lender, make your repayments on time and in full and avoid any further credit issues, your credit rating should start to recover.
With a stronger credit rating you might, at some point, be able to remortgage with a conventional mortgage lender with more competitive interest rates.
Lenders may also consider your employment stability and if your bankruptcy was caused by a one-off situation – such as illness or redundancy – and take this into account when weighing up your application.
Just make sure you understand any fees and early repayment charges you might have to pay if you switch providers.
Tips for getting a mortgage after bankruptcy
There are no guarantees that a lender will accept you for a mortgage after bankruptcy, but these five tips could help improve your chances:
1. Check your credit history and rebuild your credit score
The first step is to check your credit report. It might contain inaccurate information – for instance, the wrong bankruptcy discharge date – that could affect your chances of getting a mortgage.
You can access your credit history for free from any credit reference agency in the UK: the main ones are Experian, Equifax and TransUnion.
You should also try to rebuild your credit score as soon as possible. Do this by paying your bills in full and on time every month.
Also look at your credit utilisation ratio – the amount of credit available to you that you’re using – and try to reduce it if possible.
2. Use a mortgage broker
An authorised broker could offer expert advice on the options available to you. This could include applying to a specialist lender – also known as an adverse lender – or waiting until bankruptcy is no longer on your credit file.
We’ve partnered with London & Country Mortgages Ltd (L&C)** to provide you with fee-free mortgage advice. Get in touch with one of their advisors.
Go to L&C MortgagesAbout London & Country Mortgages Ltd (L&C)
**London & Country Mortgages Ltd (L&C) are a multi-award-winning mortgage broker with over 20 years’ experience in helping people secure their perfect mortgage. Advice is provided by L&C, who are authorised and regulated by the Financial Conduct Authority (143002).
L&C are not part of Compare The Market Limited. Compare The Market receive a % of the commission that our partner London & Country earns. All applications are subject to lending and eligibility criteria.
L&C will not charge you a broker fee should you decide to proceed with a mortgage.
3. Check your eligibility
Adverse lenders may impose stricter eligibility requirements to protect themselves.
These can include being discharged from bankruptcy for a certain amount of time and having a clean credit record since your discharge (by not missing any repayments on other debts).
Lenders will also take a close look at your income and outgoings. Having a steady job with a reliable income will help improve your chances. So, make sure your finances are in order to show you’re financially stable before you apply.
4. Save as much as you can for a deposit
The more you can save for a deposit, the better. Having a bigger deposit not only reduces your risk to lenders, it can also give you access to mortgage deals with better interest rates and lower the overall cost of your borrowing.
Ideally, save a deposit of at least 10%, preferably more. This will potentially give you more lenders and mortgage products to choose from, depending on your credit score and when you were discharged from bankruptcy.
Open a savings account as soon as possible and start putting money away. Save regularly if you can.
5. Wait until you’re free from bankruptcy
If you’re prepared to wait it out, it can be beneficial to put as much distance between you and your bankruptcy as you can before applying for a mortgage.
Consider waiting at least two or three years. It might even be worth waiting until the bankruptcy has been removed from your credit report or you’ve had time to boost your credit score in other ways.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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With over 10 years’ experience writing, editing and managing content, Emma has written and edited for some of Australia’s leading financial comparison brands, including Savings.com.au, Your Investment Property Magazine, and Your Mortgage.
Ele Clark is an award-winning editor who has held leadership roles at Which? and news-stand publications in London and Dubai. She’s appeared across the press and media, including BBC’s Panorama. With almost 20 years’ experience in personal finance, insurance and consumer journalism, she leads a talented team at Compare the Market, creating insightful, accessible content to help people make informed financial decisions.
Sajni is passionate about finding money products to help you make great financial decisions. She keeps track of the latest trends and evolving markets to find new ways to help you save money.
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