Can I get a Mortgage as a Discharged Bankrupt?
by Digital Zone digital marketerSo you have experienced a
bankruptcy and have been told to wait at least six years prior to applying
for a home loan. Waiting six long years without any guarantee of
being approved for a mortgage after bankruptcy can be disheartening.
Fortunately, this advice no longer holds true.
Today, there is a growing awareness
of the need to offer home loan products that are specifically designed
for borrowers with an imperfect credit or financial history. There
are mortgage programmes that have been specially created for borrowers who have
gone through a bankruptcy. In fact, those with a bankruptcy discharged for
even one day may apply for a home loan. Believe it or not, if your
bankruptcy was discharged yesterday, you can qualify for a mortgage today!
You are probably thinking
that although you are eligible, it will be difficult to qualify. The truth
is that qualifying is much easier than you think. Bankruptcy is a tool to
allow you to begin anew. It wouldn’t be an effective tool if it left you in a
position where future loans were denied to you. However, your credit report needs
time to recover. Your official discharge from bankruptcy is typically a year
later, but the report will hold onto the details for a further six years.
What is important and what
will be looked at is your credit score. For sure, your credit rating will make
you a less attractive prospect for potential lenders, so you need to rebuild
your credit as soon as possible. This is a crucial part of recovering from
bankruptcy. You need to understand that the type of bankruptcy you filed will
decide the amount of time it stays on your record. Although there is an amount
of time that creditors will see that you have a bankruptcy discharge on your
record, it does not mean that you will not be legible for credit. If you are
applying for a mortgage while bankruptcy is still on your credit file, you will
often be expected to pay a deposit of between 20-40% of the property’s value.
The reason for this is because many adverse lenders limit the amount that they
are prepared to lend at 60% of the property’s value, with just a few prepared
to go as high as 80%.
You would then surely want
to make sure you increase your chances of qualifying for a mortgage after
bankruptcy, and it would be a wonderful start if you can correct your past
mistakes first, learn from them and take necessary steps to rebuild your
credit.
What are some steps to take?
Your first
step in qualifying for a mortgage following bankruptcy, is to avoid applying
for another credit. The last thing you want to do is getting involved in debt
again after bankruptcy. And as you will learn, it would be difficult for you to
obtain credit for around a year following bankruptcy discharge. Most lenders
will want to wait for at least two years before they allow their bankruptcy
discharge client to apply for a normal mortgage. In some cases, though, you can
be able to apply for a mortgage after roughly eighteen months. This will all
depend on your financial behaviour between the times of your bankruptcy
discharge date until the time of your mortgage application.
The second step is to
establish new credit accounts. This may sound scary, but if you do not make the
same mistakes as you did before, everything will go on your favour. You will
need to open new credit accounts to increase your credit scores. New credit
accounts may involve opening a new major credit card, store credit card,
automobile loan, and so on. And once you have secured obtaining these types of
cards, you will need to do three things. These are, to always make your timely
payment, maintain low balances, and payoff the balance each month.
Lenders will see that you
are financially responsible if you manage your cards well and maintain regular
and well-timed payments. Being financially responsible will allow you to be
eligible for an unsecured credit card. Also, within two years you may have the
privilege to get a normal mortgage or car loan. If you are thinking of applying
for a mortgage earlier than the two-year period, you will have to search for a
lender that can help you approve mortgages for people that had bad credit
standing. Do not be surprised if you find out that this type of lender is
asking for a larger deposit and has high interest rates (7-9% instead of the
typical 2-3%), because that is the way it is. But if you really want it sooner
than two years, then this type of lender is you best option.
If you have the patience,
another option worth considering would be to wait for the years in which your
bankruptcy still appears on your record to pass (6-10 years) and then apply for
a mortgage. At this point, your bankruptcy will no longer appear on your credit
file, and if your financial situation and behaviour has gone well, it would be
worthwhile applying for a conventional mortgage.
In Conclusion,
Nowadays, with the
competitive rates that are available on mortgages after bankruptcy
programs, you are able to realize the dream of homeownership with a
mortgage payment that is affordable and fits easily within your budget.
Along with the traditional benefits of owning a home, such as
equity building and tax benefits, you will most importantly
be rebuilding your credit profile. Additionally, you may also benefit
from the current strong housing market and its appreciating home values.
So, to the question: Can I get a Mortgage as a Discharged Bankrupt? the answer is yes. Now you know that you can qualify for a home loan today, what the credit requirements for a mortgage are, and that you can rebuild your credit and financial life through homeownership. You have worked hard to discharge your bankruptcy and have the fresh start that you were looking for.
There is the empowerment that
comes with the knowledge that you can purchase a home today even if your
bankruptcy was just discharged. So get qualified for a home
loan, start searching for a home and begin packing those boxes!
For more information,
contact Independent Mortgage Brokers, they are leading experts in bad credit
mortgage and offer valuable online mortgage advice. They also offer great
mortgage advice for free.
For Any another query click here Mortgage
Broker Barnsley
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Created on Mar 4th 2021 06:36. Viewed 207 times.