Purchasing your own abode is a thrilling experience. Receiving the autonomy to possess, command and appreciate an asset in the future is something that many of us strive for. Yet, if you have filed for bankruptcy you may be pondering how long it will take before obtaining a mortgage after bankruptcy?
Although obtaining a mortgage can be tricky, even with the highest credit score, it is possible for those who have been bankrupt to get approved. It will undoubtedly be an arduous journey but don’t give up hope – it can and has been done!
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If you recently declared bankruptcy, how long should you wait before applying for a mortgage?
There is no set timeline, but it is recommended that you wait until your credit score is restored to an acceptable amount before applying for a loan. By doing this, you can show lenders that you are able to make timely and full payments on all of your financial products.
Bankruptcy will stay on your credit report for six years from the date you filed, even after it is removed. Some mortgage lenders may inquire about past bankruptcies and this can have an adverse effect on your odds of being approved for a mortgage loan—something to keep in mind when considering such financial decisions.
Unlocking the key to securing a mortgage following bankruptcy: Strategies for boosting your chances.
While there’s no certain way of ensuring that a mortgage lender will accept your application, you could consider taking the following steps in order to maximize your chances:
Wait it out
If you want to get back on your feet financially, it may be best to wait until the bankruptcy is taken off of your credit report and then take steps towards improving your credit rating. Over time, it will naturally increase but making responsible financial decisions such as taking out small loans and paying them in full by the due date can contribute significantly towards this goal. If you’re looking for more guidance about how to improve your financial standing after filing for bankruptcy, our comprehensive guide provides an excellent starting point with actionable tips that could help restore confidence in potential lenders.
Use a mortgage broker
Brokers have access to the entire spectrum of lenders, offering you more competitive rates and deals than if you were to go through them alone. Furthermore, they are knowledgeable on which lender is most likely to accept your application without leaving a negative mark on your credit score – meaning no hard queries that can remain for months.
Select a specialized mortgage lender.
For individuals with less-than-ideal credit, a select group of mortgage lenders offer financing tailored to their unique needs.
Make a larger deposit.
If you have recently gone through bankruptcy and are looking for a standard 90% LTV mortgage, it is highly unlikely that you can obtain one at this point. Therefore, if possible, presenting a larger deposit amount to the lender is your best option in securing your desired loan.
While this could be difficult if you have previously been declared bankrupt, don’t lose hope; time and patience are essential for getting a mortgage. To help guide you along your journey to owning a home, we’ve put together some guidelines that highlight the chances of securing after a mortgage insolvency:
After filing for mortgage insolvency, it is highly unlikely that you will be able to secure a mortgage in the near future.
After 1 year of successfully navigating bankruptcy, you can become eligible for a mortgage if you provide at least 40% in the form of a deposit. However, if it has been 2-3 years since filing for bankruptcy, then presenting 25% should suffice to get your application accepted.
After your bankruptcy four years ago, the chances of you being accepted for a mortgage have significantly improved. In addition, it may only require a 15% deposit!
After five to six years post-bankruptcy, the possibilities for mortgages and loans expand. You could potentially find a loan with as little as 10% down payment requested by some lenders.
It is beneficial to chat with a mortgage broker prior to making any decisions, since these estimates are just that – estimations. However, what this does suggest is the longer you wait before applying for a loan after bankruptcy, the higher your chances of being accepted with less money down!