Things to consider for getting a mortgage after Trust Deed
Posted: Feb 04, 2019
When you finished your Trust Deed, you rightly felt a huge surge of relief. That was it – the debt solution that finally helped you overcome your debt-laden life. What you may not have counted on was just how much your Trust Deed may affect you in the years to come.
If you’re now finished with seeking debt help, but instead need mortgage advice after completing your Trust Deed, read on.
First of all – It is possible to obtain a mortgage following a Trust Deed
While it may take longer to secure a mortgage, it’s entirely possible that you will one day own your own home. But before then, there’s something you need to do…
You must stick religiously to a budget, and manage your finances responsibly
That means no late payments, no defaults and certainly no debts that go to a collection agency. If you feel that you’re struggling with debt again, you must seek debt help as soon as possible to explore debt solutions.
A key question – How long after your Trust Deed can you apply for a mortgage?
A Trust Deed runs for four years. Once this debt solution comes to an end your credit record will reflect the successful completion of your Trust Deed, after which time it will remain reflected on your credit history for a further six years. For these six years your options for credit products will be limited, especially in terms of a mortgage. What’s more, even when these six years have passed, the fact that you need to declare your Trust Deed debt solution as part of the mortgage application means that it’s highly unlikely that you’ll receive a good interest rate.
That said, there are steps that you can take to reduce the time you need to wait and increase your chances of obtaining a mortgage on favourable terms.
After your Trust Deed - Top tips for a better chance of obtaining a mortgage
1. Save as much as possible for your deposit
A larger deposit will always make you more appealing as a borrower, as it reduces the risk to a lender.
As you’re now free from the repayments that you were making to your Trust Deed, you may want to consider using this money to save for a deposit instead.
2. Use a mortgage broker who’s aware of your past Trust Deed
A broker is an excellent source of debt help for those who’ve finished a Trust Deed. They have free access to the mortgage market and will be able to advise as to which lenders are most likely to accept those who’ve used debt solutions previously.
This also avoids the impact that approaching multiple individual lenders can have on your credit report, as each lender’s check on your file will leave a ‘marker’ on your credit report.
3. Use a free credit report tool to rebuild your credit after using a debt solution
Checking your credit file can help you pick up on any incorrect information that’s held about you that may harm your chance of mortgage approval.
As a starting point, you may want to consider applying for a ‘Credit Builder’ credit card, as you may be unable to receive approval for mainstream lending. If you do choose to use this type of card, just be sure to repay the balance in full every month.
4. Be prepared to explain your past circumstances
Why did you originally seek debt help in the form of a Trust Deed debt solution? Being willing to answer this question can help lenders understand whether there were any extreme circumstances that led to your debts, and how this would be unlikely to reoccur in the future. This may not apply to everyone (such as those who needed debt help after poor financial management). However if you were ill or made redundant, which then led you to need a debt solution, it’s certainly well worth explaining this to your mortgage broker.
Darren Burgess has many years of experience in the field of debt help. Visit National Debt Help for more information, guidance, and tools on how to get out of debt.