Published 10 July 2019 · Last reviewed 10 July 2019 · Older article — see current rates
Mortgages after a Repossession
If you are reading this article you are probably interested in getting a mortgage after a repossession. The reality is the mortgage bill is normally the acid test of assessing your willingness to repay debt, as after all a ‘property’ is at stake. Therefore Mortgage Lenders, even the most tolerant, will not like you to have missed multiple payments in the last couple of years. This leads through to a new level when you have been repossessed with the number of lenders drastically reduced if the problem has happened in the last 6 years, and none if the repossession took place in the last 3 years.
Frequency asked questions:
Q. My repossession was “voluntary” rather than “forced” can I get more favourable mortgage terms?
A. No, the Mortgage Lenders do not distinguish between the types of repossession.
Q. I’ve lost multiple properties to repossession can I get a mortgage?
A. If this was a portfolio that went into repossession at the same time due to an associated reason then quite possibly. If however the occurrences were separate and happened in the last 6 years then probably not.
Q. My repossession was part of my bankruptcy can I get a mortgage?
A. Generally, the Mortgage Lenders that allow repossessions will also allow bankruptcies.
Q. Will my interest rate be higher than the norm if I’ve had a repossession in the past?
A. Rates come and go, but as a rule of thumb if it occurred 5 years ago then you should not be disadvantaged on the rate. If the repossession occurred under 5 years then probably 1% or 2% higher but still competitive as rates are at a historic low.
Q. How much deposit will I need to put down if I’ve has a repossession?
A. For cases where the repossession was 3 to 5 years ago then typically 15% to 20%. In theory, if the repossession was older then a 5% deposit but experience tells me it will need to be 10% to have a realistic chance.
Q. What will improve my chances of getting a mortgage after a repossession?
A. You should certainly look to take on professional advice from a suitably qualified broker, such as Niche Advice. The main determining factors will be whether you made the original Mortgage Lender aware of payment difficulties at an early point and how your financial circumstances have improved since. Also, the Mortgage Lender will look to see how you have conducted your credit arrangements after the repossession occurred as this will support the fact you’re back on track.
Q. The repossession mortgage lender sold at a value under the mortgage balance which created a “shortfall” which is still owed to them. Can I get a mortgage?
A. Yes, but the pot of lenders will be even smaller.
Q. Is my original mortgage lender likely to consider me reapplying?
A. Unlikely, and I would go further and add if they are connecting to another Mortgage Lender within their Corporate Company Group Structure they would not lend either.
Niche Advice is a professional Mortgage Broker that offers appropriate advice to mortgage applicants including those looking to obtain a mortgage following a repossession.