Mortgages after a Repossession

Getting a mortgage after a repossession is more difficult than for someone who has a great credit report. A previous repossession makes lenders nervous because it suggests that you weren’t able to keep up on payments - making you a ‘high risk’ borrower. But we know that life can throw us curveballs, and how hard people work to change their financial situations. 

The effect that a repossession will have on your chances of getting a mortgage approved depends upon:

• When the repossession was

• What your credit score looks like today

• Your household income and affordability 

Even if you’ve previously been declined by a high street lender, that doesn’t mean that another lender won’t give you a mortgage. What’s important is that you’re able to demonstrate the steps that you’ve taken to turn around your financial situation.

A lender will want to know:

• Why the repossession happened

• How much money was outstanding on the mortgage at the time

• Which lender repossessed your property

• Whether or not any money is still owed to that lender

• Whether you have any other bad credit issues on your credit report 

One big thing a lender will look at is how you’ve managed your finances since the repossession. They won’t want to see any other credit issues like defaulted payments, late payments or CCJs since that time. They’re more likely to consider you for a mortgage if you’ve proved you’re in a stable financial position now, even if you’ve had financial difficulties in the past.

The amount you’ll be able to borrow will depend on how recently the repossession was and what your current income is. It’s important that you speak to a specialist mortgage broker (like us!) who can advise you because each lender has their own specific criteria.

The mortgage rate available to you will mainly depend on how long ago your repossession was. The more recent your repossession, the higher the rate you’ll be offered. Even with a large deposit, the closer in time you are to your repossession, the less mortgage options will be available to you. 

Interest rates fluctuate all the time, so it isn’t possible to give an exact interest rate – it’ll depend on when you’re applying for a mortgage. 

Here’s an idea of what kind of options you’ll have, and what kind of a deposit size you’ll need depending on how long ago your repossession was: 

If your repossession was less than a year ago

You won’t have any mortgage options open to you. 

If your repossession was 1-2 years ago

You’ll have very limited mortgage options, with only a few specialist lenders willing to offer you mortgage. But you’ll still have options. You’ll need a deposit around 30-40%.

If your repossession was 2-3 years ago

You’ll have more mortgage options than when your repossession was 1-2 years old. You’ll need a deposit around 30-40%.

If your repossession was 3-4 years ago

You’ll need a deposit of around 15-25% and will have more options for a mortgage. 

If your repossession was 4-5 years ago

It’ll be more likely you can get a mortgage, and you’ll need a deposit of around 10-20%. 

If your repossession was 5-6 years ago

It’ll be a lot more likely you can get a mortgage, and your deposit will be around 10-20%.

The amount of your deposit depends upon the price of the property that you want to buy. And also how long ago your repossession was. A repossession might mean you need a higher deposit if the lender is offering a mortgage with a lower loan to value rate (LTV) than to someone with an excellent credit score.

It’ll also depend upon how recently the repossession was. It’s not unusual for a lender to ask for a deposit of 30%, or even 40% if a repossession took place less than three years ago.

No. Many lenders won’t consider an application for a mortgage when the applicant has had a previously repossessed property. However, these are usually high street banks and building societies that aren’t set up to deal with complex applications.

Specialist lenders can offer mortgages after a repossession. But these deals are typically only available when working with a specialist mortgage broker. Here’s a list of specialist lenders who'll consider mortgage applications after repossession. Our Mortgage Experts can tell you which ones are most likely to accept you. Make an enquiry to find out your options.

You probably won’t be able to get a mortgage in the first 12 months after a repossession. The further away in time the repossession is, the more lenders will be willing to consider you and the more likely you will be accepted for a mortgage. 

Our Mortgage Experts know all the specialist lenders who'll accept you and when they’ll be willing to do it.

Read more in our Guide: Can I Get a Mortgage After Repossession?

When your home is repossessed, it stays on your credit report for six years. The six years starts from the date of the original missed payment. After six years, it’ll be removed from your credit record. However, you should always be honest and upfront about any previous repossessions when it comes to applying for a mortgage - even if it’s dropped off your credit file. 

A repossession will negatively impact your credit rating when it happens. Your credit score will improve in time as the repossession gets further away as long as you’re careful to improve your score during this time. 

If your repossessed house sells and you still owe money, your original mortgage lender could contact a debt collection agency to collect your debt, or file in court. If this happens, it’ll appear on your credit file and negatively impact your credit score. 

To make sure the repossession has the least impact on your credit score that it can possibly have, you should pay back the debt as soon as you can. Once it’s marked as ‘paid’ on your credit file, lenders will see that as much more of a positive than seeing an ‘unpaid’ repossession debt.

Being faced with a house repossession can feel incredibly isolating. But you’re not alone. The last thing mortgage lenders want to do is repossess your property. They want you to be able to make your payments, so if you find yourself struggling you should speak with your lender as soon as possible to find out your options.

A repossessed property will remain on your credit file for a period of six years. After this timeframe, it’ll be removed. You should always let your lender know about a past repossession because if you don’t, and they find it later, your mortgage application could be cancelled. 

The National Hunter Database keeps a record of everyone in the UK who has ever had a home repossessed, so a lender can check this at any time, which is why it’s always better to declare a repossession at the start of your application. That way, you’ll save time, effort and money.

Talking about previous financial issues can feel really daunting, and some banks will make you feel like a bad person. That’s not OK. We're a judgement-free zone at Haysto - our Mortgage Experts have seen it all. Life is full of ups and downs, so if you’re thinking about a mortgage after a previous repossession, make an enquiry to speak to one of our friendly specialists.

Usually, the higher your credit score, the easier it is to get approved for a mortgage. So it’s always a good idea to do what you can to improve your score before applying if you can. If you’re really pushed for time, it’s best to speak to a specialist mortgage broker who’ll be able to advise you on your options. Make an enquiry to find out your options.

Here are some top tips for improving your credit score after repossession:

• Pay off any outstanding debt in full (including credit cards, loans, and similar). If that’s not possible, just pay as much as you can.

• Make sure you’re listed on the electoral roll. 

• Consider reviewing the number of credit cards and accounts you’ve got open. Even if they don’t have outstanding balances. 

Read more tips on boosting your credit rating before applying for a mortgage.