Bankruptcy and Discounted Sales

Posted on 19 April 2011 by Katie

I am currently in a secure job and earning £38K pa. In May 2006 I was declared bankrupt and in May 2007 discharged. I have been on the local council's housing waiting list for 10 years! I have recently been offered the chance to buy a discounted market house. I currently only have enough savings to pay for fees. my questions are as follows

1. Is there anyone out there who would lend to me being a discharged bankrupt if I had a deposit and do you know who?

2. Who offers discounted market morgages, very few lenders seem to understand the concept and will not lend

3. I could raise a deposit via my mother, but she is tied into a Barclays Equity mortgage from years ago, do you know if it would be possible for her to release some of the equity to me?


There are a few specialist Lenders who will look at people who have been discharged from bankruptcy as little as 12 months ago.  With over 3 years since you were discharged I would expect to be able to find a mortgage for up to 60% of the property's value, but they do not come cheap with variable rates of around 8.25%.

Unfortunately for you, none of these Lenders are willing to take a property with any type of discount, shared ownership or shared equity as security for a mortgage.  This means that you would need a deposit of around 40% and additional funds to cover all the associated costs of buying and moving.

Whether or not your Mother can release more money from her property will depend on how old she is and the property's value.  She should first approach her existing Lender Barclays and then seek independent mortgage and legal advice about her choices.  Any Lender will want to be sure that she is not being pressured into taking out money against her will.

I recommend that you also start saving for a deposit now so that when your discharge now longer shows on the credit agency records in 2013, you are in a position to get a normal residential mortgage, either on your own or with another party.


Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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