Many people have faced difficult circumstances in the past. Be it the credit crunch or any other financial issues. If you have had a property repossessed and are looking to get a mortgage, it is possible. There are lenders that will consider a mortgage application after repossession.
There are several factors that will determine whether you are likely to be accepted or even considered by a lender. Due to the complex nature it is advisable to speak with a specialist mortgage broker that has experience dealing with these kinds of situations. This will put you in the best position to get your mortgage.
Details of Repossession
When speaking to potential lenders they will want to know
- When/Why it happened
- The amount that was involved
- Which lenders were you with
- Is there an outstanding balance?
- Any other adverse credit
When did the repossession happen?
Lenders will want to know how long ago the repossession happened as the longer ago it was the better your chances of securing a mortgage will be. If the repossession was within the last 12 months then there is not really any chance you will be able to get a mortgage, even with a specialist lender. If it was in the last 12 months then it would be best to wait and rebuild your credit record and save what you can to build up a larger deposit. If the repossession was over one year ago but less than three years ago it will still be difficult to secure a mortgage but with a good deposit it will still be possible.
How long ago the repossession happened will also affect the loan to value ratio a potential lender will be able to offer. Again one year to three years you are likely to need a minimum deposit of 30% of the home value. Longer than three years and the situation improves and you will likely need a minimum deposit of 20%. Once the repossession was six or more years ago you should be able to get up to a 90% mortgage. This will all depend on how much you have improved your situation since the repossession.
Why did it happen?
Knowing what caused the repossession to happen will be important to potential lenders, if the reason was out of your control, for example fraud or catastrophic event. The lender will be more sympathetic to your situation and will be more likely to review your application. Lenders will require evidence of this.
The amount that was involved
The amount that was involved is another factor that will have an impact on your application. If the repossession related to one property and was for a relatively modest sum for example 50% LTV. This will be looked upon more favourably than if it was a high percentage of the property value or multiple properties. Lenders are looking at perceived risk, the lower the perceived risk for them the better your chances of getting accepted are.
Which lender were you with
Which lender needed to get the property repossessed is a factor as some high street banks are part of the same group. This means that while you may be applying through a different bank they may essentially be the same bank. If this is the case they are likely to automatically decline your application. An automatic decline will have a negative impact on your credit score so it is a good idea to speak with an experienced mortgage broker that knows the relationships between banks and can stop any unnecessary declines on your credit report.
Is there an outstanding balance?
If you still owe money to the lender and are making repayments it will affect your chances of being offered a new mortgage deal. It will also affect the amount you will be asked to provide as a deposit.
Due to the affordability assessment lenders will look at your income and outgoings if you are still making repayments this is likely to affect how much you would realistically be able to pay back on your new mortgage which could make lenders offer you less than you require.
Is there any other adverse credit?
If you have had your home or property repossessed then it is likely you were suffering serious financial difficulty which could have led to further bad credit such as CCJ’s or Bankruptcy. When looking at your application this will also play a part in the decision process. The longer ago any other adverse credit was the better. IF it is all in the past and you have rebuilt your credit score and paid off all debt then there is a much better chance you will be accepted by a lender. If you have more recent adverse credit it may be that the risk is too high for lenders to take and you will not get a mortgage offer. If you have had CCJ’s in the past 12 months along with a recent repossession it is better to sort your circumstances out and wait until more time has passed before applying for a mortgage.
Lenders will also be looking at
- How you have handled your finances sine the repossession
- Your current financial situation
How you have handled your finances sine the repossession
Potential lenders will be looking for evidence that you have made an effort to maintain your finances and keep them in good order since the repossession. Lenders will not want to see any adverse credit such as defaults or CCJs. Lenders will be more likely to lend to someone that has maintained a good credit history since the repossession. This shows to lenders that the repossession was not the norm and a good credit history has been maintained since. This will lower the risk in the lenders eyes. If there is further bad credit then this will increase the risk to lenders and make it more difficult to be accepted by lenders.
Your current financial situation
Your current financial situation will determine how likely a lender is to review your application. If the repossession was the only problem you have had and it was over six years ago this will have dropped from your credit report which means it will no longer be an issue.
If you have a good level of income and low monthly commitments then you are in good standing and will be more likely to get accepted and have to put down a lower deposit. If your current financial situation is good but the repossession was more recent then you are still in a better position than if you had more adverse credit events but will need to put down a larger deposit to secure a mortgage.
We can help
If you feel like you may be able to get a mortgage based on the information you have read then it is a good idea to get in touch and discuss with one of our experienced specialist advisors. Mortgages after repossessions are complex and require more information than a standard mortgage so it is good to have a broker that is knowledgeable to help you secure a deal. Give us a call or fill in one of our enquiry forms and we will do our best to get you the mortgage you require.