How To Get a Home Loan after Bankruptcy
If you’ve been declared bankrupt in the past, it can be really damaging to your confidence and your hopes of getting a home loan. Don’t worry though – at Loans for People With Bad Credit we believe that everyone deserves a second chance and will do whatever we can to make your home owning dreams become a reality.
Many people with bad credit or those who are discharged bankrupt simply don’t realise that it’s still possible to get a home loan. We want to reassure you that it could simply be a matter of finding the right bad credit lender and getting back on track financially.
When to apply for a home loan
It’s important to understand that unfortunately you won’t be able to get a home loan whilst you are still declared bankrupt (this is usually a period of approximately 3 years).
The time to start to consider a home loan is when you have been discharged from bankruptcy and are starting to get back on your feet financially. Bankruptcy can stay on your credit history for up to 7 years so you’ll need to be prepared to explain it to lenders.
Options for getting a home loan after bankruptcy
When you start searching for a home loan after bankruptcy, your options can often feel limited. It’s generally a matter of finding the right lenders and the right loans for you though – so speak to Loans for People With Bad Credit to help target your search appropriately.
Getting the best rate for a home loan after bankruptcy
Generally, the interest rates for home loans after bankruptcy are going to be much higher than for standard home loans. This is usually because as a borrower you are seen as a much higher risk to the lender who is concerned that due to your financial history you could default on the loan or fail to pay it back.
Whilst it’s true that interest rates will be higher for home loans after bankruptcy, you shouldn’t have to pay extreme rates. When you’re finding home loan options, always ask for expert advice and speak to Loans for People With Bad Credit if you think you’re paying above and beyond the amount that’s fair.
One way of lowering the amount that you’ll be paying back (with interest) is to provide your lender with a large deposit. This is often a great way of getting a home loan after bankruptcy – although always make sure that you can afford to tie up the cash in a home loan and won’t be stretching yourself financially.
A larger deposit will not only reduce the amount that you’ll need to borrow from the lender, it’ll also mean that your overall interest costs will also go down and you may get a better rate from the lender.
Improving your credit rating
After bankruptcy, you’ll want to do everything perfectly in terms of finance – you can’t afford to get any more black marks against your name and you’ll need to be a conscientious borrower from now on.
Some of the things you can do to improve your credit rating include:
- Maintain a stable source of income through a stable job – evidence of this through payslips or via your bank account can be extremely useful to show to a lender
- Reduce any existing debts that you may have – make paying these debts off a financial priority for you.
- Be organised – always make sure you set up direct debits for payments so that they can’t be late, or if you don’t want to do this, set reminders on your calendar or phone so that you never miss a repayment.
- Save for a deposit – this can take a while but setting aside a small amount of money each month can really help build up a deposit and help to give you the best start with a bad credit home loan.
Continue moving forwards
If you get a home loan approved after bankruptcy, you’ll want to take this as a huge turning point. It’s really important that you continue to move forwards and seek to only improve your financial record.
You’ve got a second chance – so use it wisely and improve your credit score at every opportunity. Always make sure that you make your home loan repayments on time and in full.
If you’re overwhelmed by the task of getting a home loan after bankruptcy, or simply feel unsure about whether it’s the right step for you, speak to Loans for People With Bad Credit to get expert advice as well as access to a wide range of bad credit lenders.