Can you get a Mortgage after a repossession?

Again, this will depend on the lender and how long ago the repossession occurred, but generally you should expect to need a bigger deposit than if you were applying for a mortgage with a spotless credit record. This is another way that lenders mitigate risk, so the bigger the deposit you’re able to put down, the better your chances of having your application accepted.

Lenders often set their interest rates based on LTV bands, so if you are nearing the edge of a band it might be a good idea to save for a little longer before making your mortgage application. For example, if you currently have enough savings to give you an LTV of 81%, but your lender offers better rates for LTVs of below 80%, saving just a little more money now could save you significant amounts of interest in the long term.

While most mainstream lenders will give a firm no, there are a range of specialist adverse credit mortgage lenders who may be more sympathetic, depending on your circumstances.

At the time of writing, (February 2023), the following lenders were prepared to consider applications for a mortgage after a previous repossession. Keep in mind that exact terms will vary depending on your personal circumstances, and that these examples provide just a sample:

• Suffolk Building Society can consider loans if your repossession was more than three years ago and any shortfall debt has been repaid in full. They would offer a maximum LTV of 75%.
• Loughborough Building Society will look at applications where repossessions occurred more than four years ago, so long as any residual debt was cleared over three months ago.
• Aldermore offer up to 80% LTV repayment mortgages or 75% interest only mortgages up to a maximum of £400,000 where a repossession occurred more than three years ago.

Yes definitely. A mortgage broker is useful regardless of any bad credit you might have, but if you’ve had a repossession in the past then they are invaluable as many bad credit lenders only accept applications via referral.

Finding a lender who is willing to offer you a mortgage after a repossession isn’t as simple as going online and comparing a few high street banks - there is a lot more research involved and it will involve niche lenders who are harder to find, with more complex terms and conditions. A broker does all of this for you. They will have access to the whole of the market and if you look specifically for a broker who has expertise in bad credit mortgages they will already have relationships with the lenders that are going to be the best match for you.

They say that time is a great healer, and this is definitely true of bad credit issues like repossession. One of the simplest things you can do is wait for time to pass and for your repossession to come off your credit record. This doesn’t mean it’s gone for good, but once six years have passed you will have a lot more in the way of options when it comes to getting a mortgage.

Waiting a bit longer before putting in your application also gives you time to build up some more savings, which is another good way to improve your chances of getting your mortgage application accepted. Getting your LTV as low as possible will open up more competitive interest rates and give you access to a bigger range of lenders.

The other important thing to do is to work on improving your overall credit score. Lenders will carry out credit checks as part of your mortgage assessment and even if your repossession is no longer on your record, they will still want to see that you have maintained a good grip on your finances and proven yourself reliable since it happened.

If you are worried about getting a mortgage with a poor credit score and think you could benefit from improving it, there are a few steps you can take:

• Make sure you’re on the electoral register. This is a really simple way to prove your address. Ideally you should avoid moving house too often as well, as this can sometimes bring down your credit score.
• Keep up with any repayments on existing credit cards, loans or other forms of credit. This sounds obvious, but don’t be fooled into thinking that the odd late payment here or there will go unnoticed. Any late or missed payments get recorded as part of your credit report, and if you have a history of bad credit then lenders will be paying extra attention to details like this.
• Don’t apply for new credit. The odd credit search recorded on your file won’t do any harm, but if you have several credit applications showing in a short space of time it will be a red flag to lenders.
• Reduce your credit utilisation ratio. This is the amount of debt you currently have as a proportion of what you have access to. For example, if you currently have a credit card with a credit limit of £4,000, and have a balance of £1,250, this gives you a credit utilisation ratio of 25%. Lenders like to see this ratio kept low - ideally under 30% - as this shows a healthy attitude to credit. High ratios give the impression that you are not borrowing responsibly and that you are ‘maxing out’ credit cards.