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Are There Mortgage Options After a Debt Relief Order?

Are you reluctant to apply for a mortgage as you've repaid a Debt Relief Order and assume a lender will turn you down? Read on for the insider's guide to finding a great mortgage after paying back a DRO.

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Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
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Are There Mortgage Options After a Debt Relief Order?

If you've had a debt relief order (DRO), it can be tricky to find a mortgage lender, given that credit checks are a necessary part of the mortgage application process.

In most cases, the lending policies work like this:

  • Most DROs have restrictions on what you can borrow, often limited to £500 per month for up to one year after the discharge date.
  • The DRO will need to be discharged before you apply for a mortgage.
  • Debts included in a DRO are written off after the discharge so that they won't be a continuing issue on your credit file.
  • Most high street lenders will need six years to have passed since the DRO discharge date to consider a mortgage application - although others will accept applications after one year or even sooner.

Given these restrictions, it is essential to seek expert support from an independent broker to find a competitive mortgage after discharging a debt relief order.

Here we'll run through the process, but if you would like to get started with an application, give us a call on 0330 304 3040 or email at [email protected].

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What Limitations Do I Have on Getting a Mortgage after a Debt Relief Order?

It depends. If you have breached your DRO terms, you might have a further restriction called a debt relief restriction order - this might extend the discharge date of the original order.

Courts and the receiver decide on the end date, and the majority of mortgage lenders require at least a year to have passed before they will feel comfortable to lend.

If you have further bad credit problems after a DRO has been discharged, you might find it even trickier to secure a competitive mortgage. Lenders will typically need to see which accounts were included in the debt relief order.

Incurring additional credit issues after a DRO can be perceived as not having taken the order seriously, and therefore means that you are assessed as a risky applicant.

Is it Possible to Get a Mortgage After a Debt Relief Order?

It is, provided enough time has passed, and you have kept your financial affairs in good order. Lenders will want to review your credit file, so it's wise to check this and ensure that it is up to date and doesn't contain any errors.

Although some lenders will refuse any applicant with a debt relief order on their file, some have more flexible policies, including specialist bad credit lenders.

They will also assess why you ended up in a DRO situation. For example, if you have been placed under a debt relief order due to non-payment of taxes, lenders will assess your mortgage application as being of higher risk.

What Deposit Will I Need to Get a Mortgage Following a DRO?

Again, it depends on the lender's policies. They will assess when the DRO was registered and when it was discharged. The longer ago the discharge date, the lower a deposit is likely to be acceptable.

As a rough indication, the deposit you will need is as follows, based on the number of years that have passed since the discharge:

  • Less than one year - 30-35%
  • One to two years - 20-30%
  • Two to three years - 15-20%
  • Three to four years - 10-15%
  • Four to five years - 5-10%
  • Five to six years - 5-10%

Expert Advice on Debt Relief Orders and Mortgage Borrowing

If you've been in severe credit scenarios and are now seeking a mortgage, it is vital to work with a whole-of-market broker. Revolution Finance Brokers assesses each case individually to recommend the most suitable lenders, which is essential after credit problems such as a debt relief order.

For assistance with your mortgage requirements, give our bad credit team a call on 0330 304 3040, or drop us a message at [email protected].

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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