When it comes to choosing a mortgage after bankruptcy, there is no reason why you should not approach it in the same manner that someone who has not been through bankruptcy would. Taking this kind of approach may be time consuming, but it will ensure that you get the best deal for your circumstances and that you won’t make a hasty decision that you may regret a couple of years down the line. Getting a mortgage after bankruptcy is a big financial commitment so you want to make sure you make the right commitment from the start.
One mistake that many people make when they are looking for a mortgage is they ring round banks asking what rates they are currently offering on their mortgages. This is all very well and good, but it doesn’t take into account your personal circumstances, and especially for those with adverse credit history, this approach is not going to be of any use. You want to find a lender that can provide you with a mortgage product that is suited specifically to your current and future needs. It is all too easy to look at a few different mortgage products and choose the one with the lowest introductory interest rate or the lowest monthly payments, not taking into account how these rates and payments are going to rise at the end of any introductory period.
There are some key aspects to mortgages that are worth spending that little bit extra time researching to ensure you fully understand the product you are being offered. Here are just a few of these:
- What percentage of the purchase price is the lender prepared to lend you – this is sometimes referred to as the Loan To Value ratio or LTV ratio;
- What is the maximum repayment term the lender will offer you;
- Are you allowed to make over-payments, if so are there any caps on these;
- Is there the option to take a payment holiday if you wish to do so;
- Does the lender offer interest only repayments;
- How often is interest charged to your account;
- Are there any other product discount incentives should you take a mortgage with them, such as home insurance or car insurance;
- Do early redemption penalties apply should you wish to pay off you mortgage early?
While this is by no means an exhaustive list, it does give you some idea of the kind of things you should be asking about along with interest rates and monthly payment amounts. As you will see there are many different elements that make up a mortgage product, and it is only when you can see all these elements that you can really compare lenders accurately. Just because you are applying for a mortgage after bankruptcy doesn’t mean you can’t be choosy about your mortgage product, you may not have as much choice as someone approaching mainstream lenders, but you will still be able to choose from a few products.