In case your property has been repossessed, getting another mortgage is difficult; but contrary to popular belief, it is not impossible.

With your property repossessed in the past, you are not doomed to rent forever and can still subscribe for a home loan, maybe at a slightly higher interest rate and with a higher deposit – not a bad bargain though, as it gives you another shot in the property market.


Home loan after repossession

If it has been 12 months since your property was repossessed, it is possible to borrow up to 75% of the value (even more sometimes!) of the new property you have sights on.

However, lenders would want to know why you were repossessed in the first place. In case the reason was bad cash management, frivolous credit and irresponsible behaviour, it may be tough to convince the lenders to trust you another time. But if the reason for the past default was an illness or loss of job, you can expect lenders to be more sympathetic.


Here are some quick facts to help you in your quest.

1. Do not apply for another home loan immediately after repossession. Make sure you apply for another loan at least 12 months after the repossession. In fact, the longer the gap, the better.

2. During this period, ensure you make regular repayments to make good the loss to the previous lender in case the property was sold for less than the outstanding debt. Lenders treat this good behaviour as proof of your genuineness and improved financial situation.

3. In case you don’t owe anything to the previous lender anymore, get written confirmation from the previous lender that the debt has been repaid or forgiven.

4. While lenders are right on their part to be wary of customers who have defaulted in the past, maintaining good credit for few years can help your image in the eyes of lenders post repossession. So, maintain your credit file clean and clear and be honest about any rejected home loan applications or other outstanding debt.

Repossession is not the end of the road and it is possible to get a home loan to fund your dream home, once again. It makes sense to get in touch with a broker to understand all the options available to you (Our expert brokers will answer your queries online instantly, free of cost). However, check how much you can borrow and your monthly repayments to know what you can afford before applying for a home loan again.


You can also consider the following options in case you are looking for home loan post repossession:

1. Subprime mortgage – A subprime mortgage is issued by lenders to borrowers with low credit rating, as lenders consider it riskier to lend to these borrowers thanks to their credit history and low credit score (Understand your credit score and how it impacts your borrowing). While the interest rate on a subprime mortgage may be higher than that on a conventional home loan, it may be your only shot at getting a home loan unless you have a co-signor or guarantor, your other option in case you are looking for a home loan after repossession.

2. Co-signor home loans – Having a co-signor (with a high credit rating) on your home loan can increase the chances of your home loan approval significantly. By co-signing the loan, the co-signor effectively guarantees your loan making it easier for banks to trust you again and lend to you.


Buying a house is a major financial commitment and requires strong financial planning and foresight. In case you are struggling to make repayments and find yourself borrowing constantly to take care of your everyday needs, consider seeking financial hardship assistance to tide over hard times and avoid repossession in the first place. If you think you are ready to buy, start by comparing home loans online for the most competitive home loan deals in the market.



Book a FREE consultation
with one of our experienced
mortgage brokers today!