I had a home repossessed in the early 1990s. After paying them an agreed monthly sum for over 7 years, I eventually came to a settlement with them and paid them an agreed sum. I have a letter from them saying the amount I paid is "in full and final settlement of the debt".

I now want to apply for a mortgage but don't know where I stand. Despite what happened, I have a good credit history and have no problems in getting credit.

-- martin kelly (martinkelly17@hotmail.com), August 05, 2002

Answers

Full and final settlements
There are some issues with "full and final settlement" - which are that it has no legal validity at all, meaning you can be subsequently chased for more cash if you show that you have assets. What you need is a "deed of satisfaction". However, so far it seems pretty unlikely that lenders will use this to come back against you. But it depends who your lender was. This is one reason why - in my opinion - you should not settle a shortfall claim until you have assessed the lender's ability to back its claim in court plus your own PAYE income and asset level (see pretty much the entire "Repossession" section of this site for a explanation of this).

Can I get another mortgage?
It's easy to get another mortgage. See the "New Mortgage?" section on the left... Note the points about having to pay a slightly higher interest rate for 18 months or so, until you prove your ability to make payments on time.

Should I use a specialist lender to get another mortgage?
No. Go to a mainstream (high street) lender. Specialist lenders charge their customers more interest. This makes the lender more comfortable with the risk that you represent, but it makes you a) poorer and b) *considerably* more likely to be repossessed again if interest rates rise. A series of interest rate rise is particularly likely when interest rates are as low as they are now. You have been warned!

Which mainstream mortgage lender should I go to?
In my opinion, having seen hundreds of examples of how mainstream lenders treat customers *after the customer has taken out a mortgage* (as opposed to the promises about how they would treat the customer that lenders made *before* the customer took out the mortgage), there is only one mainstream lender worth touching. Woolwich. I hate the way Woolwich treated their current (chequing) account customers when they first became a bank. I used them and killed my current account with them in the end because of their mistakes and their attitude. But... they beat all the other mainstream lenders when it comes to decent treatment of their mortgage customers. I don't get money from them. I don't have a mortgage with them or any other link or contact with them. I just see hundreds of mortgages that, for one reason or another, have gone wrong and Woolwich is the *only* lender that appears to recognise that customers are people who have both legal and moral rights.

I don't want to use Woolwich - who should I use?
Er, the Woolwich. But OK, if you insist on hearing my second favourite choice: it's, erm, the Woolwich. Possibly the Ecology Building Society if you are in the market for their particular type of mortgage.

OK, which mainstream (high street) mortgage lenders should I avoid?
Abbey National, Halifax. There are several others, but in my opinion, these two are the worst of the mainstream lenders. Note: I have never had a mortgage with them and customers using the "Voters say" poll on this site say Halifax are OK. I differ from the voters on this.

Should I get a mortgage at all?
Right now, in summer 2002, no. I don't know if house prices will fall, but I think that the risk that they will fall is now too high to be a risk worth taking. I can't predict a fall but I can assess the risk of a fall. Right now, the risk of a fall is extremely high.

But it's not as if it is 1988...
You're right. Unlike 1988, we don't have a government that has publicly warned that it will do what it has to with interest rates to get the trade deficit down (it's odd how nobody remembers that the trade deficit was what inspired Lawson to begin sharply raising interest rates in 1988) but we do have a variety of economic circumstances that suggest a high risk of a house price fall. You can't manage the economy but you can manage your exposure to risk. If the risk of a house price fall is high, you can quickly and efficiently expose yourself to that risk by buying a house. You can quickly and efficiently protect yourself from that risk by *not* buying a house.

Hope that helps! ;-)

-- Lee (repossession@home-repo.org), August 11, 2002.

Best thing to do is apply to a mainstream lender AFTER you have got a credit report from either Experian or Equifax or both - if that shows nowt adverse on it, then you will almost automaticaly get a "normal" mortgage.

If it does show adverse history, either get it corrected if incorrect, or apply to a "sub prime" lender like GMAC RFC.

-- David Button (davidjohnbutton@supanet.com), August 05, 2002.