Understanding Bankruptcy Discharge
When you're declared bankrupt, you're usually discharged after 12 months (this can be extended if you don't cooperate). After discharge, you're released from most of your debts and can start rebuilding your financial life - including getting a mortgage.
Can I Get a Mortgage After Bankruptcy?
Yes, absolutely. While bankruptcy is the most serious form of adverse credit, specialist lenders exist who will consider applications from discharged bankrupts. The key factors are how long since discharge, your deposit, and your credit behaviour since.
Timeline After Discharge
Your options improve significantly as time passes from your discharge date.
Typical timeline for mortgage options:
- Day 1 of discharge - A few specialist lenders may consider (high rates, 30%+ deposit)
- 1 year after discharge - More options available, still specialist market
- 3 years after discharge - Significantly more lenders, better rates
- 6 years after discharge - Bankruptcy drops off credit file, near-normal options
Bankruptcy is removed from your credit file 6 years after the bankruptcy ORDER date, not the discharge date. However, many lenders focus on time since discharge.
Deposit Requirements
You'll need a substantial deposit when applying after bankruptcy. Most lenders want at least 25%, with some requiring 30% or more, especially if it's soon after discharge.
Explaining the Bankruptcy
Lenders will want to understand what caused the bankruptcy. Some causes are viewed more sympathetically than others.
Causes viewed more sympathetically:
- Business failure (especially in economic downturn)
- Relationship breakdown / divorce
- Serious illness affecting ability to work
- Redundancy and inability to find work
- Being a victim of fraud
Causes that raise concerns:
- Reckless spending or gambling
- Multiple bankruptcies
- Fraud or dishonesty
- Bankruptcy restrictions order (BRO) extended discharge
Rebuilding Credit After Bankruptcy
Your credit file is essentially reset after bankruptcy, but this isn't necessarily bad. It's a chance to build a clean credit history.
Steps to rebuild credit:
- Get on the electoral roll
- Consider a credit builder credit card (use responsibly)
- Keep all bills paid on time
- Avoid applications for credit you don't need
- Check your credit file for errors regularly
Don't hide your bankruptcy history. Lenders will find it, and failing to disclose could be considered fraud. Be upfront and let us find the right lender for your situation.