Can I Get a Mortgage After a Repossession?

If you have gone through some difficult financial times which resulted in the repossession of your home, you may be wondering if there is any chance you will be able to successfully apply for a mortgage in the future. In answer to the question posed in the title of this post, yes there is a way you can get a mortgage after a repossession. However, it’s not so much whether it’s possible, but there are a few important factors that will greatly improve your application. 

The Cost of the Repossession

Another factor that can heavily affect your chances of a new mortgage is the money involved. Particularly if it’s high. For example, if your repossession involved thousands and even millions of pounds, or involved several different properties, you will find it harder to secure a mortgage. Even if you do, it will generally be for a more expensive rate. 

On the other hand, if your repossession involved just one property or a relatively small amount of money, there are lenders who would still accept your mortgage application and even offer you affordable, competitive rates. 

Reason the Property Was Repossessed

One key aspect of your repossession that many lenders will take into consideration when looking at your new mortgage application is the reason your property was repossessed. For example, you will have a better chance securing a brand-new mortgage even after repossession, if the reason the property was repossessed was down to things out of your control such as you were the victim of fraud. Some lenders take those kinds of situations and calculate better deals based on them.

How Recent Was the Repossession?

A big factor in whether you can secure a new mortgage after repossession is simply how long ago the repossession occurred. If it’s relatively new, say, within the last 3 years or so, you will find hard to secure a mortgage. And if you do, you will need to make a significant deposit. If, though, it was more than 3 years ago, you may be able to qualify for a mortgage with an 85% LTV. 

If the repossession is even older, say, happened over 6 years ago, you may qualify for a mortgage with a 95% LTV.  To work out your LTV percentage, this check out this handy guide by Zoopla.

As well as your chances of securing a mortgage being affected, the rate you can qualify for will be impacted by how recent the repossession was. In situations where your repossession happened less than 3 years ago, you will be expected to pay a much higher rate, possibly over 6%. Whereas, if it happened more than 3 years ago, you could see the rate go down somewhat to 5%. 

The best scenario would be if your repossession happened more than 4 years ago, as you may qualify for rates closer to the best on the market at anything as low as 2%.

So, really repossession, as traumatic and life changing as it is, does not end your time on the property ladder completely. You need to think carefully and choose the right lender who will be sympathetic and offer some leeway when you look for a new mortgage.

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