Mortgage after a Debt Relief Order

About Martin Alexander

Martin has been a mortgage advisor for over 15 years. Check to see if you qualify by filling out our quick form or give us a call on 0800 195 0490. mortgage reviews

Applying for a mortgage after a debt relief order (DRO) can be a daunting task. Many borrowers assume that getting a mortgage is impossible but that isn’t the case. Although lenders will scrutinise mortgage applications with a magnifying glass, it’s still possible to gain approval. This is of course with the right advice and approach towards your mortgage.

Due to having had a DRO, lenders will base their assessment largely around the details of the DRO. This can involve the dates of both when the DRO was registered and when you were discharged. The reasons for having had a debt relief order will also be taken into account. Your current financial conduct will also play a part in which lenders may or may not be suitable.

It’s important to understand that each lender will make assessments in their own unique way. Some lenders are more likely to decline a mortgage with a debt relief order, whereas other lenders may be more suitable. Approaching a high street lender will likely result in a declined application and you may need a more specialist lender depending on your circumstances.

Our advisors specialise in mortgages involving debt and bad credit. Based on a borrower’s circumstances, our advisors are able to pinpoint the most suitable lenders to improve the chance of mortgage approval quite considerably. You can make an enquiry below to get started or continue reading for more information.

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Why are the dates around a debt relief order so critical?

The date of when your debt relief order was registered and the date of when you were discharged are vital bits of information for when making a mortgage application. If you’re yet to be discharged, then unfortunately you won’t be able to get a mortgage just yet. Whilst your DRO is active, it will prohibit you from borrowing large amounts of money. For this reason, a mortgage would simply be out of the question.

The good news is that debt relief orders typically last for 12 months. That being said, you still won’t be able to apply immediately after you’ve been discharged. The majority of lenders require up to 6 years before they’ll even consider mortgage approval, however there are a handful of lenders that may offer you a mortgage much sooner. Nonetheless, you’ll still have to wait 12 months from the date of discharge and your credit file needs to be pretty much intact since discharge.

Lenders pay attention to the discharge date as the chances of mortgage approval drastically improve the further time goes on. The reason lenders will only consider lending after 12 months of discharge is so they’re able to assess your credit affairs following the DRO.

Another reason the date of discharge is important is because of the deposit amount lenders will require for a mortgage. For instance, if you’ve been discharged for 12 months, you may need a minimum 30% deposit. Deposit amounts less than this may mean finding a mortgage will be extremely difficult. On the other hand, if you’ve been discharged for 6 years, you may be approved with a 5-10% deposit.

How much can I borrow if I’ve had a DRO?

Having had a debt relief order will make you a high-risk borrower. As a result, they’ll only be a handful of lenders that you’ll be able to approach and may be limited in how much you can borrow. If you are eligible for a mortgage, the amount you can borrow will differ from lender to lender.

The majority of lenders will only lend up to 3 times your annual income, however there are lenders that may even lend up to 5 times your annual income. The amount you can borrow will therefore largely depend on your income.

Lenders will also factor in your outgoings as well as what you earn. Underwriters need to be sure that the loan is affordable so that it can be repaid. Having financial arrangements such as vehicles on finance may also hinder this part of the application as it will minimise the amount you’ll be able to borrow. The fewer outgoings you have, the better.

If you’re self-employed then things can get even more tricky. This is because self-employed applicants are deemed to be a higher risk when compared to employed applicants. That being said, if you have over 3 years accounts then you should have no affordability issues during your mortgage assessment. If you have less than 3 years accounts, then it will be difficult to get a mortgage, however it is possible.

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What if I’ve had a restriction placed on my DRO?

If you’ve failed to comply with the terms of your debt relief order then you may be hit with a restriction on further borrowing. This is known as a debt relief restriction order or DRRO. The restriction is placed by official receivers to minimise further lending to the individual so that their credit doesn’t spiral out of control.

If you have a DRRO, then you’ll need to speak to an advisor. This is because the length and terms of the restriction will vary for each individual. Once an advisor understands the terms of your DRRO, they’ll then be able to provide you with a tailored answer.

Will bad credit affect me getting a mortgage after a DRO?

If you’ve had a debt relief order, then the chances are that you would have had credit issues. The type, severity and the date of your credit issues will all play a part in which lenders are approachable and whether or not a mortgage is possible.

Our advisors specialise in mortgages with bad credit. Furthermore, our advisors also have a wealth of experience in securing mortgages that involve debt relief orders. If you’ve had any of the below issues with your DRO, our advisors can help:

  • Late payments and arrears
  • CCJs
  • IVA
  • Repossession
  • Defaults
  • Bankruptcy
  • Low credit score

Applying for a mortgage after a DRO requires specialist knowledge. As there can be so many variables involved with credit problems, approaching a lender yourself will likely result in a declined application. Being declined a mortgage will only damage your credit file further, so do get professional advice before applying.

A good place to start your mortgage journey is to check your credit reports. Lenders will check your credit files, so it’s wise to check them beforehand. You’ll then know exactly what your credit file shows and can base your approach on this.

Specialist debt relief order mortgage advice

If you’ve had a debt relief order and need a mortgage then do get in touch. You can speak to an advisor today who can guide you through the process. They’ll inform you of whether or not a mortgage is possible and the amount you’ll be able to borrow.

Our advisors specialise in difficult mortgage cases. Furthermore, our advisors have access to every UK lender and aren’t restricted to a panel of lenders. Call us now on 0800 195 0490 or make an enquiry below to get started.

Get INSTANT Advice.

Name *
Phone *
Property Value
Loan Amount
Optional Message
Safe. Secure. Confidential.