Is it possible to obtain a mortgage after repossession?
Yes. It is possible that you can get a mortgage even if you have had your property repossessed in the past. The key is to know which lenders to apply to, meeting the criteria of those lenders and having demonstrated good credit conduct since the repossession. There are various factors which will have an impact on your mortgage application after repossession. These factors are explained below.
Recentness of repossession
If your property was repossessed with in the last 3 years, it will be very difficult to get a mortgage unless you can make a significantly large deposit. For cases where the repossession is over 3 years old, you can get a mortgage with an LTV up to 85%. However, if your repossession was over 6 years ago, you can get a mortgage with the LTV as high as 95%.
The date of the repossession will also have an impact on the rate at which you can obtain a mortgage. For cases where the repossession occurred within the last 3 years, the rate will be significantly higher at over 6%. For cases where the repossession happened over 3 years ago, the rate will be a little more competitive at around 5%. For repossessions dated over 4 year ago, the rates offered will be similar to market leading rates at around 2%.
However, it should be noted that rates will also depend on the amount of deposit you have as well as other credit issues.
Size and number of repossessions
The amount of money involved in the repossession can also have an impact on your mortgage application especially if this is very high. If the repossession was for amounts in millions or for multiple mortgages, then it may be difficult as well as expensive for you to obtain a mortgage. However, for a repossession entailing a few thousand pounds or for asingle mortgage repossession, many lenders may willingly accept your application and offer you competitive rates. Please note that this is just the general trend that we have determined based on our vast experience working with all type of lenders. The actual chances of your application being successful and the mortgage rates offered will depend on the quality of your application.
Reason for repossession
There are many lenders who will also consider the reason for your repossession when appraising your application. If the reason for the repossession was because you were the victim of fraud or other factors out of your control, many lenders will waive these factors in order to offer you a better deal. The key is to understand which lenders operate this policy when considering applications which feature repossessions.
Repossessing mortgage lender
Your mortgage application can also be affected by the mortgage lender who repossessed your property. It is a common practice among lenders belonging to a group of companies, such as Lloyds Group, to reject applications across the entire group if the mortgage was repossessed by one of the companies in the group. It is therefore important to understand which mortgage lender is the most appropriate for your requirements and offers the best rates for your mortgage. Our expert mortgage advisors can help you to find exactly the right mortgage lender and help you get the best deal that your application can achieve.
There can be cases where you still owe an amount of money to the lender after repossession due to a shortfall on your mortgage. In these cases, the number of lenders who will accept your application will become significantly fewer and your deposit requirements are also likely to increase.
Other credit issues
Many borrowers who have had their property repossessed often have other credit issues such as late payments, arrears, defaults, CCJs, bankruptcy, etc. This is because a mortgage is usually the last thing that borrowers would want to default on in the case of any financial trouble. In such cases, the number of lenders who will accept your application further decreases especially if you have also suffered further credit issues since the repossession as this raises question over your creditworthiness.
Credit conduct post repossession
Your chances of getting a mortgage increase significantly if you can demonstrate a good credit history since the repossession. Lenders prefer to accept applications from borrowers who display good recovery after a credit issue compared to borrowers who struggle to recover even after repossession.
Loan affordability after repossession
Your affordability after repossession will depend on the recentness of the repossession. If the repossession date was within the last 3 years, it is likely that your maximum affordability will be calculated at 3 times your annual income. However, if the repossession date is over 3 or 6 years, your affordability rises to 4 and 5 times your annual income respectively.
Remortgage after repossession
It is possible for you to obtain a remortgage after your repossession. The conditions and the rates will be similar to that for a standard mortgage but, if you hold a sufficient amount of equity in your property, then you can arrange a remortgage more quickly and easily compared to a standard mortgage.