How Long After Repossession Can I Get a Mortgage?

There are a few factors that come into play when applying for a mortgage after a repossession.

When the Repossession Took Place

The further in the past your repossession occurred, the more likely you are to be approved for a mortgage. Lenders will see that you have had time to rebuild your finances and establish a good track record of making payments on time.

If your home was repossessed within the last 3 years, you’ll find it harder to secure a mortgage. There’s handful of lenders that don’t require that a minimum number of years have passed since the repossession but these tend to come with strict criteria and whether you qualify will be down to the underwriter’s assessment of your unique situation.

For situations where the repossession occurred 3 - 6 years ago, there will be more lenders willing to consider your application, but these will likely still come with caveats that may limit your max LTV (loan-to-value).

If your repossession was more than 6 years ago, you’ll have access to most lenders and more competitive deals, including some high street ones.

The Reason for the Repossession

Some mortgage providers will consider the reason for the repossession when assessing your application. If the repossession was due to extenuating circumstances beyond your control - such as job loss, illness, or being a victim of fraud - this will be viewed more favourably than if it was due to negligence on your part. Be honest with your broker and provide as much detail as possible about the circumstances that led to the repossession. Your broker will then be able to match you with a lender willing to consider these factors.

Whether You Defaulted on a Mortgage with a Lender that’s Part of a Wider Collective

If you try to apply for a mortgage with the lender that repossessed your home, they're unlikely to accept you. This is important to keep in mind, as many lenders (particularly high street lenders) are part of a larger group of companies, all of which share information about your mortgage history. So, if one lender in the group has repossessed your home, it's unlikely that any other lender in the group will lend to you in the future.

The Amount of Money Involved in the Repossession

The amount of money linked to the repossession may also have an influence on your mortgage application, especially if it is significant. If the repossession was for millions of pounds or several mortgages, it may be even more challenging and costly to get a mortgage.

Conversely, many more lenders will consider your application if the repossession was more than 6 years ago and was a single mortgage repossession on a small property. That said, the actual likelihood of your application being approved and the mortgage rates offered will depend on other factors surrounding your application as well as the lender’s criteria.

The Presence of Legacy Payments

If you're looking to get a mortgage after your home has been repossessed and you're still making legacy payments, this can make the process more difficult. A legacy payment is a monthly amount that you pay to cover the amount that you still owe on the property. It's essentially an agreement between you and the lender to cover the shortfall from the property’s sale. While some lenders may be willing to offer you a mortgage despite having a legacy payment, others will view it as a sign that you're not in a position to afford a mortgage and will reject your application outright.

Whether You've Had More Credit Issues

Borrowers who have had their property repossessed typically suffer from additional credit issues such as late payments, arrears, defaults, CCJs, bankruptcy and other difficulties. This is due to the fact that a mortgage is generally the last thing people default on when they’re having money problems. The number of lenders who will accept your application gets smaller the more credit issues you’ve had.

How You've Managed Your Finances Since the Repossession

One of the most important things lenders will consider when reviewing your application is how you’ve managed your finances since the repossession.

This includes factors such as whether you have:

• Settled your defaults - if you have any defaults on your credit file, it's essential to make sure that these have been settled as soon as possible. This shows lenders that you're taking responsibility for your debt and are working to improve your financial situation
• Kept up with your credit commitments - lenders will also look at whether you've kept up with your other credit commitments since the repossession. This includes things like credit card payments, personal loan repayments, utility bills, etc.
• Managed new credit - taking out new credit or having an overdraft or additional credit cards isn’t something you necessarily need to avoid as long as you’re successfully managing them alongside your other finances. In fact, it can be a way to help rebuild your credit score. However it’s unadvisable to take out new credit if you’re concerned about managing your finances
• Made an effort to improve your credit score - this will be viewed favourably by lenders. Make sure you're on the electoral roll, keeping up with credit commitments and not applying for too much credit in a short space of time
• Regular income - this shows that you have the means to meet your mortgage payments and are less likely to default on the mortgage

Lenders want to see that you've improved your financial situation and that you're in a better position to afford a mortgage now than you were at the time of the repossession. By taking these steps and demonstrating that your finances are in order and that you have a regular income, you'll be in a much better position to get approved for a mortgage post-repossession.