Introduction: If your company faced liquidation or external administration, impacting your credit, securing a home loan may seem daunting. However, possibilities exist, especially if certain criteria are met. 

Qualifying Criteria: To apply for a mortgage post-liquidation, consider the following: 

• Alternative Income Source: Your income must be from a source other than the insolvent company. 
• Provable Income: Ability to provide evidence supporting your income. 
• No Ongoing External Administration: The company should not be under current external administration. 
• Consideration for Director’s Guarantees or Debts: Some lenders entertain loans for refinancing directors’ guarantees or debts. 
• Loan-to-Value Ratio (LVR): Borrowing no more than 90% of the property value. 

Understanding Insolvency: 

• Definition: A company is insolvent if it can’t pay debts by the due date. 
• Types: Cashflow insolvency (lack of cash to pay debts) and balance sheet insolvency (owing more than owned)

External Administration: 

• Definition: Encompasses voluntary administration, liquidation, and receivership. 
• Voluntary Administration: Directors or secured creditors appoint an external administrator to assess and decide on the company’s future. 
• Liquidation: Involves selling assets, winding up, and deregistering the company. Can be court-ordered, creditor-initiated, or director-initiated. 
• Receivership: A secured creditor appoints a receiver to sell assets to repay debts. 

Borrowing While in Liquidation: 

• Challenge: Most lenders prefer finalized liquidation before approving a loan. 
• Possibility: With a letter from the liquidator confirming ongoing liquidation progress and no outstanding claims, mortgage approval may be facilitated. 

Recovery Against the Director: 

• Scenarios: Receivership or liquidation can lead to claims against the director, depending on the situation. 

Impact on Credit and Borrowing: 

• Credit Listing: A liquidated company remains listed on directors’ credit files. 
• Defaults: If your company faces defaults, court judgments, or adverse listings, some lenders may still consider directors as having clear credit. 
• Application Process: Providing evidence and a credible explanation for the liquidation event increases approval chances. 

Case Study: Impact on Borrowing: 

• Scenario: Jan faces a lease dispute, considering liquidating his company. 
• Impact on Credit: Liquidation may impact current and future borrowing. Specialist lenders might consider applications post-liquidation. 
• Debtor Pursuit: Debtors may pursue directors if a personal guarantee was given. 
• Administrator Letter: A letter from the administrator confirming no personal liability can enhance approval chances with some major lenders. 
• Timeframe: A minimum of one year post-liquidation may increase approval likelihood. 
• Loan Structure: Specialist lenders may be initial choices, with possible refinancing to prime lenders after 1-2 years.

Considerations: 

• Ongoing Relationship: Maintain a positive relationship with the external administrator for crucial documentation. 
• Specialist Lenders: While often an initial choice, eligibility can vary, and lending policies evolve. 

Conclusion: Navigating home loans with a credit history affected by a liquidated company involves meeting specific criteria, providing evidence, and understanding the lender landscape. Seeking professional advice and maintaining transparency in the application process are key elements in securing mortgage approval.