It is possible to get another mortgage if your property is being repossessed. However, contrary to popular belief, it’s not impossible.
You don’t have to let your property go if it was repossessed. However, you can still apply for a loan at a higher interest rate and with a lower deposit. This gives you another chance in the property market.
Number and size of repossessions
Your mortgage application can be affected by the amount of money involved in repossession, especially if it is extremely high. It may prove difficult and costly to get a mortgage if the repossession was for large amounts or multiple mortgages. Many lenders will accept your application for repossessions that are less than a thousand pounds, or single mortgage repossessions, and may offer you attractive rates. This is not a general trend we have established based on extensive experience with all types of lenders. Your application’s quality will determine the likelihood of your application being accepted and the rates you receive.
It is possible to borrow up to 75% of the property’s value if it has been twelve months since it was repossessed. Sometimes, you can even borrow more! You are interested in the property that you want.
Lenders would like to know the reason you were repossessed. It may prove difficult to convince lenders to trust you again if the reasons were bad cash management, reckless credit, or irresponsible behavior. If the cause of the previous default was illness or loss, lenders will be more understanding.
These are quick facts that will help you on your quest.
1. You should not apply immediately for a home loan after repossession. You should apply for mortgage-after-repossession. The longer the gap between repossession and application, the better.
2. Make regular payments to your previous lender to make up the difference if the property is sold for less than the outstanding loan. This is considered good behavior by lenders as evidence of your financial stability and genuineness.
3. If you have not owed anything to the lender before, ask for written confirmation from that lender.
4. Although lenders have a right to be cautious about customers who default in the past they can still help you in the future by maintaining good credit over a few years. Keep your credit file clear and clean. Also, be open about any home loan applications that have been rejected or other debts.
It is possible to obtain a loan for your home to help you finance your dream home. To understand the various options, it is a good idea to contact a broker.
If you’re looking for a home loan after repossession, there are also the following options:
1. Subprime mortgage – Lenders issue subprime mortgages to borrowers with poor credit ratings. This is because lenders view these borrowers as riskier than those with a better credit history. A subprime mortgage’s interest rate may be higher than a conventional home loan. However, this may be your only chance to get a loan.
2. Home loan co-signors – A co-signor with a good credit rating can help increase your chances of getting approved for a home loan. The co-signor ensures that your loan is approved, making it easier for banks to lend again to you.