People who have repossessions on their credit report wrongly believe they will never be able to get another mortgage.
There are many things to consider, but it is possible to obtain a mortgage after repossession. This guide will show you how to do it, what you need to wait for, and where you can get the best advice.
What happens if you are repossessed?
The more recent the incident, the better your chances of getting a mortgage. Lenders will also consider the amount of debt and the circumstances surrounding repossession.
If the repossession occurred within the past 12 months, we don’t know of any lenders who would be willing to consider your mortgage application. It will be difficult if your property has been repossessed in the past 3-4 years.
There’s a higher chance that you will be considered by more lenders for a mortgage if your credit history is between 5-6 years. Time is the greatest healer, as with all credit problems.
What happens if your house is repossessed
A property that is repossessed is sold to pay your mortgage and all legal costs incurred in obtaining a repossession order. If you have negative equity, this is bad news as the sale price won’t be enough to cover your outstanding mortgage.
You may have to repay the remaining amount to the lender if this is the case. This is known as a legacy payment and can reduce your options for lenders.
They will be more sympathetic if the circumstances are beyond your control.
Finding an experienced broker who specializes in finding mortgages for those with repossessions on their credit files is key to getting a mortgage.
Are you required to declare repossession?
Yes, you do. Yes, even if the incident is removed from your credit reports, you still need to declare it if asked by the mortgage provider.
Lenders view repossession as a very severe adverse credit event. Lenders will likely decline your application if you fail to disclose it when requested.
How to get a mortgage following a repossession
A little preparation will make your application easier.
These are some things that you should do to ensure your application for mortgage approval is successful.
Make sure you have all the documents in order: It will help to save time and stress by having all the paperwork prepared ahead of time. You should have copies of three months of bank statements and proof of address. The lender will need proof of income to verify your affordability. Our complete guide to mortgage applications will provide a list of all the documentation you’ll need.
Review your credit reports: Before you submit your application, we recommend you review all credit reports. This will allow you to verify that the repossession is not on your credit report or that sufficient time has passed since it occurred to meet lender eligibility criteria. This will show you any credit-related black marks that may be hidden. You can also challenge inaccuracies and have any outdated information removed. You can access your credit reports via our dedicated credit report hub.
Talk to a specialist mortgage broker After you have all your documents prepared, we recommend you talk to a mortgage broker that specializes in repossessions. These brokers will be able to identify lenders that have been more favorable in the past for such applications. Brokers can also help you prepare your application by taking into consideration your credit history and including all supporting documentation that will give you the best chance of success.