In this brief guide, we are going to answer the question “if my house is repossessed can I get another mortgage”.

If my house is repossessed can I get another mortgage?

Yes, you can get another mortgage if your house was repossessed before but you will have to be selective about which mortgage lenders to apply to in order to get a mortgage after a repossession. You must also have improved your credit since the repossession.

Can you get a mortgage after a repossession?

Yes, you can get a mortgage after a repossession but you will usually have a few selections of bad credit mortgage lenders who may be willing to lend to you and hence the mortgage offers you may receive won’t be competitive.

As getting a mortgage after a repossession may seem like a very difficult and specialist area of the mortgage market you may need a specialist bad credit mortgage broker to assist you with this.

There will be bad credit mortgage brokers who are willing to assist you but they will insist that you have improved your credit since your home repossession took place.

How much can you borrow after a home repossession?

After a home repossession, the amount you may be able to borrow will depend on your annual income and the date of the home repossession. In comparison to someone with a good credit score and history, you won’t be able to borrow as much as they would be able to.

Due to having a home repossession on your credit history you may find that the amount you are able to borrow is much smaller and you are limited to a few mortgage lenders.

After the mortgage credit directive, every mortgage lender will now put your through very stringent mortgage affordability checks to determine if you can indeed afford the monthly mortgage repayments.

The main factor determining how much you can borrow after a home repossession is the age of the home repossession.

The table below gives you a guide on how the age of the home repossession plays a part.

Age of repossessionLikely income multiple
12 to 36 months3 times income multiple
36 to 72 months4 times income multiple
72 months plus5  times income multiple

Will you need a much bigger mortgage deposit if you have had a home repossession?

Yes, you will usually need a much larger mortgage deposit if your home has been repossessed. This is because ost bad credit mortgage lenders will only offer a loan to value of up to 75% which means you will need to put a mortgage deposit of 25% and upwards.

The more recent your home repossession was the more likely you will have to put down a much bigger mortgage deposit.

The table below gives you an idea of what your mortgage deposit requirement maybe after a home repossession.

Time since repossessionMortgage deposit requirement
Less than 12 monthsNo chance of a mortgage
12 to 36 monthsMinimum of 30% 
36 to 72 monthsMinimum of 20%
72 months plusMinimum of 10%

What affects a mortgage lenders decision to lend after a home repossession?

Getting a mortgage after a repossession isn’t as hard as it used to be. 

In fact, since the financial crisis mortgage lenders have acce[ted that there would be a lot of borrowers who got hit and had to lose their homes.

When assessing your mortgage affordability after a home repossession the mortgage lender will want to know how you have managed your credit affairs since he home repossession, they will want to know about your current financial situation( how much you get paid, if you have any debts and what your future financial position could look like) and finally, they will want to understand how you ended up with a home repossession. 

A mortgage lender will pay close attention and scrutiny on the details of the home repossession and other details:

They will want to know:

Why the home repossession happened

Where the home repossession happened

When the home repossession happened

Who was the mortgage lender

How much the debt was and if there is still any balance outstanding

Your credit history since the home repossession

Your current financial position

Why the home repossession happened

The mortgage lender will want to know why the home repossession happened. If the home repossession was due to something which was not in your control then it is very likely you will be able to get another mortgage after the home repossession.

E.g the financial crisis or getting disabled and being unable to work or any serious incident which could have made a home repossession inevitable.

Where the home repossession happened

The location of the home repossession may also be important to the mortgage lender as th are may have been affected by an economic downturn and hence made the people in that area redundant or more likely to fall into financial difficulty. 

When considering if you can get another mortgage after a home repossession the mortgage lender may look into the region where the home repossession took place.

When the home repossession happened

The mortgage lender will also consider when the home repossession happened before deciding if you can get another mortgage.

This is because the time the home repossession happened could have been a time when the economy was going into a recession and hence a lot of homes would have ended up being repossessed due to banks becoming much more tight with credit and wary of defaulters.

A mortgage lender will also take into consideration how long ago the home repossession was.

As mentioned prior, the farther back the home repossession was the more likely you are to get another mortgage.

If the home repossession was within the last 12 months then your chance of getting another mortgage is very slim.

You should instead focus on building your mortgage deposit and building your credit score and history.

The age of the home repossession will also affect how much the mortgage lender may require you to put down as a mortgage deposit as the table below depicts.

Time since repossessionMortgage deposit requirement
Less than 12 monthsNo chance of a mortgage
12 to 36 monthsMinimum of 30% 
36 to 72 monthsMinimum of 20%
72 months plusMinimum of 10%

Who was the mortgage lender

A lot of mortgage lenders have the same parent company and hence are from the same group.

This means that if a mortgage lender with the same parent company has performed a home repossession on you then any other mortgage lender in the same group will automatially refuse you another mortgage.

E.g Halifax and Lloyds banking group.

How much the debt was and if there is still any balance outstanding

Although the value of the debt is a less significant factor than the time since the home repossession.

Mortgage lenders will still want to know if it was a huge debt on one property or a huge debt on many properties or if it was simply a small debt.

They will also want to understand the percentage of the debt in relation to the equity you had in the property.

This will allow them to weigh up the risks and understand their risk exposure to you.

The mortgage lender will also want to know if you still have an existing debt which you are paying due to the home repossession.

If you do, this may increase the risk for the new mortgage lender and reduce your mortgage affordability to get another mortgage after a home repossession.

This means the new mortgage lender may request a much higher mortgage deposit to reduce their loan to value and hence risk exposure on the mortgage.

If you are still paying a monthly payment towards the debt on your home repossession this will also reduce how much you have at the end of each month to pay your monthly mortgage repayment on your new mortgage.

This could, in effect, reduce the size of the mortgage you are eligible for.

Your credit history since the home repossession

Your credit history after the home repossession is a very big factor which the mortgage lender will look into in order to understand if you have made any good strides towards improving your creditor if you are still incurring missed credit repayments and other bad credit such as late payments, defaults, county court judgements etc.

If you are still getting more bad credit flags on your credit report then it is very unlikely the mortgage lender will offer you another mortgage after your house was repossessed.

If you have made positive strides and ar slowly building your credit then you are more likely to get another mortgage after your house was repossessed. 

If you have had any other negative issues such as bankruptcy, individual voluntary arrangements, debt management plans or county court judgements then the mortgage lender will look to understand if these events all happened around the same time, why they happened and what you have done since then.

The mortgage lender will also look at the age of these events and then make a decision on if to give you another mortgage after your house was repossessed.

Your current financial position

The mortgage lender will also want to understand your current financial position before deciding if to give you another mortgage after your house was repossessed.

The mortgage lender will look at the number of debts you currently have, what your disposable income is at the end of the month.

The reliability of your income and your future income prospects.

Missing out on government schemes

Unfortunately, you may not be able to use any of the below government schemes to boost your mortgage deposit as most of the government schemes below do not accept people who have bad credit such as a home repossession.

Your best bet is to wait for 6 years until the home repossession has dropped from your credit score. You should note that the government scheme providers may still ask you if you have ever had bad credit and what type of bad credit and you should be honest.

You should also use this time to build your credit score.

The government schemes you may miss out on include:

  • Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
  • Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
  • Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
  • Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
  • Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
  • Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
  • Right to buy– allows you to buy your home at a discount price.
  • Preserved right to buy- same as above.
  • Right to acquire- same as above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

Remortgage after repossession

Yes, you may be able to get a remortgage on a separate property after a home repossession if you have sufficient equity in that property.

FAQs: if my house is repossessed can I get another mortgage

Using a Bad credit mortgage broker

You may want to consider using an independent bad credit mortgage broker to get a mortgage.

Mortgage brokers are important as they can access bad credit mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A  bad credit mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. 

This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we answered the question “if my house is repossessed can I get another mortgage”.

If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.