Yet further evidence that the risk pendulum has swung too far, from reckless to ridiculous, has emerged this week.
Two years ago a bankrupt person knew that once their bankrupcy was discharged someone would lend to them and even if they were only 2 years from bankruptcy they may have qualified for normal rates. How the market has changed, with most lenders now having a policy that says if you have ever been bankrupt, they won’t lend regardless of when it was. There is no discretion, no assessment of risk, just a straight decline.
I know this because against the odds I have just managed to place a mortgage for a client in this boat. The client was bankrupt in 1980 and since then has been married, divorced, had kids who have grown up and moved house four times. He now runs a very successful business which has survived 2 major recessions and his last borrowing from his bank was two years ago, since when he has paid off £50,000 capital.
Looking for a 60% buy to let, Experian credit score of 999, doesn’t appear on the Bankruptcy register. Total borrowing is just under three times his main income, not accounting for rental income. So all in all a good bet but because he answers the question have you ever been bankrupt truthfully he gets declined: initially by his Bank, but then by two other major lenders and two building societies.
The happy ending is that we have placed the deal for the client but his options were severely limited. 30 years ago we were all doing something different so where’s the understanding of risk and commonsense?