Getting a mortgage after sequestration
February 21, 2019
Please note – we cannot provide mortgage advice.
Sequestration is a serious form of insolvency action, equivalent to bankruptcy in the UK, which can affect your chances of getting a mortgage. Once placed into sequestration, your assets and equity will be transferred to the ownership of a trustee who will manage the sale in order to release cash and repay creditors.
After sequestration, you will receive a discharge notice which will officially mark the end of your bankruptcy. This is typically 12 months after the date of sequestration, on the anniversary that you entered into it. As a result, your chances of getting a mortgage will be limited. This will typically be based on your spending record and the timescale from when you entered into sequestration.
What are my chances of getting a mortgage after sequestration?
Many lenders will refuse a mortgage application if you have entered sequestration. The register of insolvencies will record all live cases of sequestration which typically run for 12 months if all terms are adhered to. The register of insolvencies is the Scottish register which records insolvencies of individuals and businesses.
Sequestration will also be visible on your credit record for future lenders and banking providers. Following a period of six years; it will no longer be visible.
How can I improve my chances of getting a mortgage after sequestration?
Time will heal your chances of getting a mortgage as the more time bided from the discharge of your sequestration, the smaller the risk for the mortgage provider. This is dependent on your spending behaviour and whether it illustrates a responsible and trustworthy spending record.
Credit Card – A credit card is a common way to build up your credit record and depict to your mortgage lender that your spending behaviour has improved. By making small value purchases through your credit card and making the repayment within the month, you will be able to show that you are a responsible borrower and have no outstanding liabilities.
Electoral Register – Ensuring that you have a record on the electoral register will instantly improve your credit score. This is used to confirm your identity and the stability of your lifestyle based on your fixed address and how often you move residences. This check is typically performed when taking out mobile contracts, credit cards and other purchases which require an ongoing financial commitment.
Credit Record – Frequently checking your credit record can help track credit arrangements including overdraft facilities and credit cards. It will record if repayments are made on time or late, including defaults. Your credit report will also record whether you are registered on the electoral register.
Specialist Mortgage Providers
Amongst brokers and high street mortgage providers, it is worth noting that there are lenders who specialise in providing mortgages to those discharged from sequestration. Mortgages of this sort are typically easier to secure but there may be restrictions in place, such as high interest rates. The fees may be higher than expected and you may have limited access.
Securing a mortgage after sequestration can be a difficult and testing process; however, there are options available for discharged bankrupt individuals. Keeping a steady track of your credit record can help pinpoint your pressure points and how you can improve this. There are credit check agencies who can offer regular credit reports such as Equifax, Experian, and ClearScore.
If you would like more information on getting a mortgage after sequestration and how this can affect your options available, Scotland Debt Solutions can help. We can provide professional advice on how to ensure you have the best chance to qualify for a mortgage. Call the Scotland Debt Solution team for a same-day consultation at any of our four offices in Scotland, or a location of your choice.
Your personal credit score plays an important part in securing new loans and credit, and can affect your financial life for better or worse. Lenders use the information in your credit file to determine whether you present a high risk of default, and if your credit score is low, you may find it difficult to […]
Credit unions offer a range of financial products including current accounts, savings accounts, and loans, and can be a good alternative to banks and building societies whilst also helping your cash flow. There are credit unions all around the UK, almost 100 of them operating in Scotland. They’re not always widely advertised, however, and although […]
It’s a worrying situation when you realise your outgoings exceed your income, and it can be difficult to prevent debt in this situation, but there are solid steps you can take to get back on track – you just need to act quickly. Increasing your income or reducing the money going out are essentially what […]
If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work. As far as your old employment is concerned, it’s important that you check your final wage slip to […]
If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting […]
A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy. A Debt […]