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Can I Get a Mortgage After Repossession?

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Can I Get a Mortgage After Repossession?
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Repossessions are an extremely difficult experience for anyone to go through. Not only can they affect you terribly in the present, but you may also be worried about your future. One of the common questions people have is whether or not they can get a mortgage after repossession.

Here we’ll answer that question in detail so you can get clarity about your future. We’ll also see how you can overcome the difficulties of getting a mortgage. By the end, you’ll have all the info you need. Let’s take a look!

The Possibility of Mortgage After Repossession

Yes, you can get a mortgage after repossession. While that is true, there are caveats. You need to prove to the lender that you aren’t at high risk of missing mortgage payments. They may be hesitant to grant you a mortgage due to your past repossession.

Perhaps the biggest barrier to getting a mortgage after repossession is time. If you apply for a mortgage in under a year since the repossession, it will be almost impossible to get approved. Around the two to three year mark would be very difficult unless you had a large deposit.

Once you get past five years, you shouldn’t have any significant barriers to getting a mortgage with a regular deposit.

During your application, you’ll be asked many questions about your affordability. The lender will also expect that any previous mortgage shortfall has been paid off. You’ll also want to ensure you have rebuilt your credit level to a respectable score.

There are no rules in place to prevent you from ever getting a mortgage again after repossession. As with any mortgage application, the lender will do an assessment of potential risks. They would have done this when you first bought a home.

In their view, having a previous home repossessed means that you pose a greater risk. Due to this, the application can be more difficult as you need to jump through more proverbial hoops. They may require more assurances in the form of your income and deposit.

Why Is It Harder to Get a Mortgage After Repossession?

The easiest way to answer this question is by reducing it down to a basic example of you lending money to a friend.

For example, a year ago, you lent £100 to a friend, and they never paid you back, claiming they had no money to pay you with. Now, they come to you again asking if they can have another £100, would you give it to them?

You’d be at least hesitant, thinking about how they didn’t pay you back last time. This is effectively what happens with mortgage companies. They are sceptical about your ability to repay your mortgage, thinking that another repossession is going to be likely.

There are many potential risk factors that a lender will consider. These can include things such as variable income, significant debts, and poor credit history. Simply put, if they assess the risks as being too high, they’ll reject the application.

Tips for Getting a Mortgage After Repossession

If you’re hoping to get a mortgage after repossession, then are a few things you can do to make your life easier. Here we’ll look at all the ways you can increase your chances:

Wait

If it’s only been a couple of years since your repossession, it’s best to wait it out. It will be easiest to apply after four years, but especially five. The longer you wait, the better deal you’ll get, and the less your deposit will need to be.

Show Stable Income

You’ll need to prove to the lender that whatever happened in the past won’t happen again. This includes showing a stable income which will allow you to pay your mortgage payments easily. This can be difficult for those who have variable incomes.

Build Up Credit

You’ll need a great credit score before applying for a mortgage after repossession. This will require you to show an extended period where you’ve paid your bills on time. If your rating isn’t great, then it’s probably best to wait for a while until it builds up.

Large Deposit

There is no better way of mitigating risk than having a large deposit. This gives your lender plenty of security due to their immediately being equity in the home. If you apply for a mortgage a few years after repossession, you’ll most likely be required to have a large deposit anyway.

Have No Debts

It’s a great idea for your other credit commitments to be minimal before applying. This can include loans and credit cards, but most importantly, it includes your previous mortgage shortfall, if you had one.

Choose Another Lending Group

It’s best not to apply to the same lender, and also not to apply to the same lending group. For example, don’t apply for a mortgage with NatWest if you previously had a mortgage with Royal Bank of Scotland, as they are owned by the same company. Aim to choose a completely different lender.

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Click on this link if you want to find out more about whether you can appeal a repossession order.

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