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.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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