Mortgage after repossession

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

It’s common to think that a mortgage after repossession isn’t possible. High street lenders will often decline anything to do with adverse credit. As a result, many assume that every lender is the same.

This post will explain how lenders make their assessments on mortgage applications involving repossession. We’ve also explained the steps you can take to strengthen your chances of being approved a mortgage if you’ve been repossessed.

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Can I get a mortgage after repossession?

Repossession is one of the most severe forms of adverse credit, so it’s important to understand that mortgage approval certainly isn’t easy.

There are lenders that specialise in bad credit mortgages and have specific products for applicants with bad credit. Bad credit mortgage lenders will still carry out an assessment before lending. Depending on your circumstances, getting a mortgage after repossession could well be a possibility. Expert mortgage advisor has helped many people to secure great mortgages after repossession.

To summarise, lenders will usually assess applications on:

  1. The details of the repossession
  2. Your credit/financial profile since the repossession
  3. Your current financial position

How to get a mortgage after repossession

Do your research and prepare yourself before applying for a mortgage, especially after repossession. Lenders will ultimately decide on whether or not they’re going to lend to you. For this reason, it’s important to understand how a lender will assess you after you’ve been repossessed.

When were you repossessed?

The number one factor that lenders will take into consideration is the date of your repossession. This is because the more time that has gone on since your repossession, the more likely lenders are to consider giving you a mortgage. If you were repossessed last week for example, then you’ll need to wait at least a year before applying for a mortgage. You’ll also more than likely be charged higher fees if the repossession wasn’t too long ago.

The below table displays a brief summary of repossession date timelines and the effect it has on your mortgage application.

Repossession dateDeposit requiredLikelihood of mortgage
Less than 1 year agon/aAlmost Impossible
1-2 years agoapprox 35% – 40%Very Difficult
2-3 years agoapprox 30% – 35%Difficult
3-4 years agoapprox 15% – 20%Possible
4-5 years agoapprox 10%Very Possible
5-6 years agoapprox 10% or lessVery Possible
Over 6 years ago5%Extremely Possible

The amount of your repossession debt

The amount of debt you were repossessed on is also a factor that lenders will take into consideration. For example, if you were repossessed owing millions of pounds on multiple mortgages, then lenders would consider this high risk. If you only owed a few thousand pounds on one property, then lenders become more lenient.

Even if you’ve had a huge repossession and lost multiple properties, our advisors may still be able to help. Every lender has different criteria for when they assess a mortgage after repossession. It’s our experience and knowledge that helps us place your ‘situation’ and application to the right lender.

Are you still in debt after repossession

Once you’ve been repossessed, the lender will normally use an asset management company to sell the property. This is to recover the cost of the mortgage. The property is usually sold either by private treaty or via auction. Once the property is sold, there may be a shortfall which the lender will require you to pay back.

Take a look at the example below:

  • How much you paid for your property= £150,000
  • Deposit = £15,000
  • Mortgage amount = £135,000
  • The lender sold the property for = £120,000
  • Outstanding debt = £15,000

If you’ve still got outstanding debt once the property has been sold and you’re still paying this off, then this makes it even more difficult to obtain a mortgage. That being said, don’t give up hope until you’ve spoken to a specialist mortgage advisor.

Reasons for repossession

The reason you were repossessed is also another factor that lenders may consider. For instance, you may have been a victim of fraud or faced very difficult circumstances. Nonetheless, some lenders will flat out decline you irrelevant of why you were repossessed.

Lenders may require evidence to support your application to help in their assessment. A specialist advisor may be able to present this in a particular manner to lenders, greatly improving your chances of being approved. That’s why expert mortgage advice is so important, as we know exactly who to place your mortgage with and how to present your application.

Some lenders may be part of the same banking group, therefore if you’ve been repossessed by one lender, then all other lenders in the same group are likely to decline your application. This is why an expert mortgage advisor can be so vital in your application when applying for a mortgage after repossession.

The current status of your credit file

If you’ve been repossessed, the chances are you’ll have further issues reflecting on your credit file. If you’ve run into further bad credit problems such as CCJS, IVAs, bankruptcy, defaults, late payments, etc..then each one can impact your mortgage assessment.

Lenders may still see you as high risk if you’ve had further issues since you’ve been repossessed. This is because, from a financial viewpoint, you’re still in financial trouble and may not be deemed suitable for a mortgage.

If you’re applying for a mortgage after repossession, lenders may require evidence that you’re now financially stable. This may be as simple as making your credit card payments on time every month. Evidence of recovery and stability is vital for lenders. Some clients we’ve spoken to have incorrectly taken out payday loans in order to improve their credit rating. However, this is not something that we’d advise, as lenders don’t seem to like this. Learn more about mortgages and payday loans here.

How much can I borrow if I’ve been repossessed?

As previously explained, the date of your repossession is the number one factor that lenders will consider when assessing your mortgage. The date of repossession also heavily affects mortgage rates that will be available to you.

In cases where repossession is recent, you’ll more than likely be offered high rates and require a larger deposit. If you faced repossession five to six years ago and you’ve kept a spotless credit file since, you should be eligible for some great rates and possibly even 95% loan to value products.

If you’ve had past or present issues on your credit file in addition to your repossession, then securing great rates can become difficult. The more credit issues you have, the higher rates you’ll have to take on, if approved a mortgage that is. If you’ve had great credit since your repossession, then you should be able to choose from better rates. You can speak to an advisor to see what mortgage rates you qualify for.

Get INSTANT Advice.

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