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Can I Get a Mortgage After Repossession?2019-11-07T15:02:19+00:00

Can You Apply for a Mortgage after Repossession?

If you are a homeowner who has been affected by repossession, you may be wondering if it is possible to get a mortgage for a new home. If so, read on. Below, we list the key points you need to know when applying for a new mortgage after a lender has taken possession of a previous residential property.

Is It Still Possible to Get a Mortgage?

In the first year or two following repossession, former homeowners might encounter difficulty obtaining a new mortgage without a large deposit. Generally, a down payment of around a third of the value is necessary, i.e., 30 to 35 per cent.

After repossession, applications tend to be less straightforward than for someone with a flawless credit history. Nonetheless, selected lenders may be willing to consider requests that match their criteria. Much depends on the circumstances and what has happened since the possession proceedings. Naturally, lenders look at the risk factors involved in each case; the most significant factor is the time that has passed since the repossession occurred.

Timing

Fortunately, it becomes less tricky to apply for a new mortgage from the three-year point onwards. After this interval, depending on the applicant’s profile, applications for up 85 per cent of the property value are sometimes possible. As an example, if the new home has an agreed sale and purchase value of £160,000, some lenders might concede up to £136,000. Thus, the deposit would be £24,000.

After six years, it may be possible to find a mortgage with a deposit of 5 per cent. In other words, a homebuyer may be able to secure a loan for up to 95% of the purchase price. To continue the above example, the mortgage loan would be £152,000 and the deposit £8,000.

Interest rates usually are higher during the first four years following house repossession. After five to six years, the percentage typically returns towards current market conditions.

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Application Quality

Following repossession, the success of a new mortgage application very much depends on its quality. If there were mitigating reasons for the repossession, it could be helpful to include some evidence to support this. Naturally, lenders take into account the underlying history, whether you still owe the previous lender money and the relative health of the rest of your credit file.

Notably, some lenders take a standard approach and follow rigid lending policies. As a result, they might decline any applications that do not fit their profile. In contrast, specialist lenders might prove more flexible, especially if there was a legitimate reason for the repossession. In this sense, support from a knowledgeable and experienced mortgage broker can be of great value in packaging and presenting an application in the right way.

For these reasons, following repossession, many applicants decide to apply for their new mortgage through a broker who is familiar with lenders’ varying criteria, the different possibilities on offer from time to time and the best way to put an application together.

Depending on an applicant’s current situation and financial record, it may be possible to arrange a mortgage through a specialist lender at surprisingly competitive rates of interest, especially after a few years. One could apply to a lender in a different group of companies from the one that initiated the repossession; for instance, the Lloyds Banking Group includes Halifax, Birmingham Midshires and Bank of Scotland.

Affordability

Loan affordability and total value are crucial. Characteristically, for three years after repossession, banks, building societies and specialist lenders will calculate maximum affordability at three times the applicant’s annual income.

With time, it is usually possible to obtain a higher income multiple. Significantly, the amount of deposit paid also affects the rates of interest on the loan.

Legacy Payments

Former owner-occupiers (also known as mortgagors) of repossessed properties might still owe money their lenders. Typically, this situation arises due to negative equity or a shortfall on the monthly payments and extra costs.

Unfortunately, legacy payments mean that the number of available lenders is likely to be fewer and the requirement for an initial deposit noticeably higher. Equally, a history of multiple repossessions and high amounts of unresolved debts could also complicate matters and limit the choice of lenders.

Wherever possible, one of the best ways to achieve a new mortgage is to pay off any old loan balance. Clearing an individual debt record in this way means the amount shows as paid and, as a result, it is possible to normalise one’s credit history sooner than would otherwise be the case.

Credit Problems

Understandably, when an owner-occupier defaults on a mortgage for whatever reason, there could well be a history of credit issues with other companies. Applicants with impaired credit ratings, ongoing arrears and county court judgments (CCJs) for bankruptcy will find it less easy to obtain a new mortgage.

Conversely, individuals who can demonstrate reliability and good credit history since any previous repossession are more likely to receive a favourable response from new lenders.

If you would like confidential advice about applying for a mortgage after repossession, please click here(-hyperlink). We will be glad to help.

We help save your home by stopping your eviction, helping you clear your arrears negotiating with your lender.

What people have to say about Home Owner Management Services

Thank you so much for your help. We can now keep our home for the long term. We now have to pay our Lender a monthly payment we can finally afford after a year of turmoil. The hardest thing was unpacking all the boxes we had already packed because we thought there was no hope.

Everything you did for us was so quick and professional, our home was saved before we knew it, it took some time to sink in, but they really did achieve what we thought was impossible. In less than 24 hours of phoning them the eviction order was cancelled.

With the weight off our shoulders we can concentrate on living again and earning the money we need to pay the mortgage without living in fear of the Bailiff knocking on the door with an eviction order!

Mr & Mrs J W

I really had my head in the clouds as I believed I now had no where to turn. I had already made my appointment with the council to assess me for emergency housing. However my council said they could only find me a hostel to stay in. 1 call to Aggressive Lender Solutions and I no longer had a problem.

They resolved the Eviction order in a matter of days, giving me every confidence that they could achieve it, every step of the way. I don’t know where Id be if they didn’t help.

Mr B

I really can’t thank you guys enough. I was certainly headed for another breakdown, however, the sheer weight of your support saved me from despair and I am sat at home nice and  warm, in familiar surroundings thanks to you.

I can’t believe, looking back, how much time I wasted trying to convince the lender to let me stay, so many documents and offers, my only regret is honestly not phoning you sooner.

Mrs M
I was at a total loss at what to do with my situation, having been a mortgage broker, I was convinced I had the ability to talk to my lender and negotiate however; nothing I could offer was good enough!

They explained the process to stop the eviction and when it all came together it was like a case of De Ja Vu, it went EXACTLY as they said it would. They got me enough time to save up my deposit to go and rent, and I just let the lender have the house because I had negative equity anyway.

I am now back to a comfortable state of living and have no stresses anymore. I didn’t have to borrow any money from anybody because I didn’t have to pay the mortgage while I was saving up for my rent.

The best part was having the ability to remove my belongings at my own pace, and it not being done for me! I didn’t need to arrange storage or anything. I cant begin to express how grateful I really am!

Mr L

It is never too late to contact us, even if your eviction is only an hour away. Call 0800 298 0571

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