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If you've lost a home to repossession, it's natural to feel that owning a property again is out of reach. But don’t worry, there’s often hope for the future.
At Echo, we've spoken to people who've been through repossession and come out the other side. It's one of the hardest things anyone can go through, but it doesn't have to define your entire future. Getting a mortgage after repossession is about showing lenders you've rebuilt your finances, and we're here to help you do just that.
In this guide, we'll explain how long you may need to wait, what deposit you might need, how a mortgage shortfall affects your application, and how our specialist team can provide judgement-free advice on your options.
Can you get a mortgage after repossession?
Yes, you can. Repossession is one of the most serious marks a credit file can carry, so it takes time and the right lender. But it's not impossible.
Most high street banks won't consider you until several years have passed. However, specialist lenders who use human underwriters will look at your application individually, and the longer it's been since the repossession, the more lenders become available to you.
Specialist lenders will usually focus on:
How long ago it happened: Most lenders want at least three years to have passed, and your options widen considerably after that
The reason behind it: Repossession caused by redundancy, illness, a relationship breakdown or a sharp rise in rates is viewed more sympathetically than one caused by simply stopping payments
Whether there's a shortfall, and what you've done about it: Lenders want to see that any remaining debt has been repaid, settled or is being paid under an agreed plan
How you've managed your money since: A clean credit record, steady employment and a history of paying rent on time all count in your favour
Any other credit issues: A repossession on its own is easier to place than one alongside recent defaults, CCJs or arrears
How many properties were repossessed: One repossession is very different to several
What about after a voluntary repossession?
Yes. A voluntary repossession (where you hand the keys back to the lender) is still recorded as a repossession on your credit file, and most lenders treat it in much the same way. However, some underwriters may view it slightly more favourably, as it shows you engaged with your lender rather than waiting for court action.
What if you've had more than one property repossessed?
It's much harder, and most lenders won't consider more than one repossession. However, a small number of specialist lenders may still look at your application, particularly if the repossessions happened at the same time (for example, a buy-to-let portfolio) and were caused by circumstances outside your control.
Check if you're eligible for a mortgage after repossession
How long does a repossession stay on your credit file?
A repossession stays on your credit file for six years. It's usually recorded against your mortgage account as a default or repossession marker, alongside the missed payments that came before it.
After six years from the default date, the record drops off your credit file. At that point, you'll generally have access to a much wider range of lenders. However, some mortgage application forms ask whether you've ever had a property repossessed, regardless of whether it still shows on your file. Always answer honestly, as non-disclosure can lead to a mortgage offer being withdrawn.
What is a mortgage shortfall debt?
If your home was sold for less than you owed on your mortgage, the difference is called a shortfall. Repossession doesn't wipe this debt out, and your lender, or a debt collection agency it's sold the debt to, can ask you to repay it.
In England and Wales, lenders have up to 12 years to take legal action to recover the capital part of a shortfall debt, and six years for the interest. Many lenders have also committed to start recovery action within six years of the property being sold.
An outstanding shortfall can make getting a new mortgage harder, because lenders will want to know how it's being dealt with. Common options include:
Repaying it in full, if you can
Agreeing a payment plan that you can afford
Offering a full and final settlement, which some lenders will accept for less than the full balance
If you're being pursued for a shortfall, it's a good idea to get free debt advice before agreeing to anything. Our guide to mortgage arrears covers where to find free help.
How long after repossession can you get a mortgage?
The more time that's passed since your repossession, the easier it becomes, as a greater number of lenders will open their doors to you.
The table below gives a general idea of how lenders tend to view a repossession at each stage:
The post-repossession timeline
Time since repossession | Lenders likely to consider you | How lenders view your application |
Less than 3 years | Very few, if any | Extremely difficult. Only a handful of specialist lenders may consider exceptional cases, usually with a large deposit and a strong explanation of what happened |
3 to 6 years | Specialist lenders | A real turning point. Specialist adverse credit lenders with human underwriters will consider you, especially if any shortfall has been dealt with and your credit record has been clean since |
6+ years | Most of the market, including high street banks | A clean slate on your credit file. Many mainstream lenders will consider you, although some may still ask about historic repossessions on their application forms |
Please note: This is a general guide only. Lending criteria change frequently, and your shortfall position, other credit issues and current income will all affect which lenders can help.
How much deposit do you need?
You'll usually need a larger deposit than a standard borrower, but the amount falls the longer it's been since your repossession.
3 to 4 years after repossession: Expect to need a deposit of around 20% to 30%
4 to 6 years after repossession: Many specialist lenders will consider 15% to 25%
6+ years after repossession: With a clean credit record, you may be able to access 10% deposit mortgages, and sometimes lower
A larger deposit reduces the lender's risk and can open up more competitive rates. However, it won't override a lender's minimum waiting period, so it's worth speaking to a broker before you set a savings target.
Mortgage rates after repossession
It's true that a mortgage after repossession will usually have a higher rate at the outset than a standard high street deal, as specialist lenders price in the extra risk.
However, we always encourage our clients to look at the bigger picture. Taking a shorter fixed-rate mortgage and keeping every payment on time rebuilds your credit file month by month. By the time your deal ends, your repossession will be older and your track record stronger, and we can help you remortgage onto a more competitive rate.
"Losing your home is devastating, and many people we speak to assume they'll be renting for the rest of their lives. That's rarely true. Lenders want to understand what happened, and what's changed since. If you've dealt with any shortfall and kept your finances in order for a few years, there are lenders who will give you a fair hearing, and our job is to make sure your story is told properly."
John Tarazi Joint mortgages after repossession
If the repossessed property was jointly owned, the repossession and any shortfall will usually show on both of your credit files, even if you've since separated. You may also both still be liable for any shortfall debt.
If only one of you has a repossession in your past, applying with a partner who has a clean credit history and stable income can strengthen the application. However, you'll still typically need a specialist lender. If you're no longer financially linked to a former partner, ask the credit reference agencies to add a notice of disassociation to your file.
How to get a mortgage after repossession
If you're ready to start looking for a home again, here's how to prepare your application:
- Deal with any shortfall: Lenders will want to see that any remaining mortgage debt has been repaid, settled or is being paid under an agreed plan
- Rebuild your credit: Consider a credit-builder card, use it for small purchases, and pay it off in full every month. Make sure you're registered on the electoral roll
- Check your credit report with all three agencies: Lenders may use Experian, Equifax or TransUnion. Check that the repossession and any shortfall are recorded accurately, with the correct dates
- Keep a clean record: Pay every bill, rent payment and credit agreement on time. A strong rental history is particularly valuable
- Gather your paperwork: Lenders will usually want proof of income, recent bank statements and a short explanation of the circumstances behind the repossession
- Avoid applying directly to the high street: If you're less than six years on from your repossession, a decline means a hard search on your credit file, which can affect your next application
- Speak to a specialist broker: Finding the right lender is everything after a repossession, and that's exactly what we do
Facing repossession now? Get help early
If you're behind with your mortgage and worried about losing your home, contact your lender as soon as possible. The earlier you speak to them, the more options you'll have.
There's no set number of missed payments that triggers repossession. Under the Financial Conduct Authority's (FCA) rules, repossession must be a last resort. Lenders must treat you fairly and consider alternatives first, such as a payment arrangement, a term extension, a temporary switch to interest-only or adding the arrears to your balance. They must also follow a court process before they can take possession.
Lenders who've signed the government's Mortgage Charter, covering around 90% of the market, have also committed not to repossess a home within 12 months of the first missed payment, except in exceptional circumstances.
If you receive a court letter or a possession claim, don't ignore it. Free, confidential help is available from:
Shelter (England) and Shelter Cymru or Shelter Scotland
Get specialist mortgage advice after repossession
At Echo Finance, we understand that repossession is rarely the result of one bad decision. It's usually the result of life taking an unexpected turn, and we don't judge anyone for it.
We specialise in helping people find mortgages after repossession, including those who've been turned down elsewhere. We know which lenders are sympathetic to your situation and which to avoid, and we'll take the time to listen to your story so we can present it in the best possible light.
Ready to take the first step towards your next home? Speak to a repossession mortgage expert today. There's no judgement here, and our initial chats are completely free.
FAQs
There's no set number. Repossession must be a last resort, and lenders must try alternatives and go through the courts first. Lenders who've signed the Mortgage Charter have committed not to repossess within 12 months of the first missed payment, except in exceptional circumstances.
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