Does Repossession Impact Your Credit Score?

Estimated reading time 6 minutes

Buying a home is a significant milestone in life, symbolising stability, security, and a place where we cherished memories are created.  However, life can throw curveballs, leaving homeowners in financial distress and facing the looming threat of repossession. In this blog, we’ll delve into how repossession affects your credit score, ways to prevent it, and how cash house buyers like Gaffsy can be your lifeline during tough times.

Understanding Repossession

A repossession occurs when a lender, typically a bank or mortgage company, takes back ownership of a property due to missed mortgage payments or financial defaults.

To answer the burning question: Your credit score is like a report card for your financial trustworthiness, used by lenders to gauge whether they should lend you money.

How is it Calculated?

Credit reference agencies uses different scales but generally speaking the higher the score the more likely you are to get approved for loans and get possibly better rates of interest when applying for credit. It is based on information from the electoral register, your credit history, details of any court judgments or bankruptcies, past and present credit commitments like credit cards, loads, mortgages etc that you’ve held in the last 6 years as well as any searches on your credit file.

When you miss mortgage payments and your property faces repossession, it’s a glaring red flag on your credit report.

  • Credit Score Hit: Repossession delivers a substantial blow to your credit score. It can cause a significant drop, making it increasingly challenging to secure credit for future needs, like loans, credit cards, or even renting a home.
  • Lingering Shadow: A repossession can haunt your credit report for quite some time—up to six years! During this period, it can hinder your ability to access credit and might even affect job opportunities or insurance rates.

Avoiding Repossession:

It is vital to explore ways on how to stop house repossession.

  1. Open Dialogue: If you’re grappling with financial difficulties that are affecting your ability to meet your mortgage payments, it’s crucial to talk to your lender. Lenders often have programs to assist homeowners facing temporary financial hardships. Negotiating a more manageable repayment plan might be possible. Pssst … do you know about the Mortgage Charter?
  1. Get Expert Help: They can help you put together a holding letter which will detail why you are in arrears and a follow up correspondence outlining how and when you will repay.
  1. Let your Home: where the rent covers the mortgage payments and it gives you the option to rent more affordably without losing your home.
  1. Sell Your London Home Quickly: Sometimes, the most effective way to sidestep repossession is to sell your property quickly. As the average house sale is just over 4 mohts selling your home on the open market is probably not an option as you look to avoid falling into further arrears. This is where Gaffsy a cash house buyer comes into play.  You can sell your London house fast, we don’t charge a penny so you don’t have to worry about finding money to pay for your legal fees. You will need to ensure the valuation we provide is enough to cover the mortgage debt.

Pssst … do you know about the Mortgage Charter?

If you are struggling with your mortgage repayments or worried about your fixed term coming to an end you are not alone.  The government has recognised the difficulty the rise in interest rates and the cost of living has had on households and introduced the Mortgage Charter. It was introduced in June 2023 to offer support for UK mortgage holders and signed up to by 90% of the mortgage market lenders.

From 26th June

A borrower cannot be forcibly removed from their home without consent in less than 1 year from their first missed payment, unless in exceptional circumstance.

From 10th July

  1. If you are approaching the end of a fixed rate deal the charter gives you the opportunity to lock in a deal up to six months ahead of time.
  2. A borrower who is not behind with his mortgage payments will be allowed to make interest only payments for six months to help get their finances back on track.
  3. Customers can extend their mortgage term reducing their monthly payments with the option to switch back to the original term within 6 months of contacting the lender.
  4. These options will not impact a borrower’s credit score, providing they have not missed a mortgage repayment.
  5. If you have fallen behind with your payments do continue to work with your lender for support.

How can a Cash House Buyer Help?

Gaffsy a cash house buying property company offers homeowners a quick and hassle-free way to sell their house now or sell a flat fast. Your property will not have to go on the open market, there are no sale fall throughs and no property chains collapsing.  

Gaffsy delivers:

  • Speedy Process: Cash house buyers can complete a sale within days, which is a lifeline if repossession is looming. You can access the cash necessary to pay off your mortgage and debts promptly.
  • No Repair Hassles: These buyers typically buy properties as they are, so you don’t need to worry about costly repairs or renovations before selling. This is especially comforting when finances are tight.
  • Privacy and Confidentiality: If you value keeping your financial situation discreet, cash house buyers offer a private and confidential way to sell your property without involving estate agents or public listings.
  • No Estate Agent Fees: Selling through traditional channels often involves hefty estate agent fees and commissions. Cash buyers eliminate these costs, ensuring you receive the full value of your property.

Steps to take

Repossession and credit score damage are a grave threat to your financial. However, by exploring options such as open communication with your lender, negotiating repayment plans, and considering a swift sale to cash house buyers like Gaffsy you can steer clear of the worst outcomes.

In the competitive London, property market where values can fluctuate rapidly, taking quick action in challenging times is crucial. While repossession may appear daunting, it’s reassuring to know that practical solutions are available to homeowners facing dire straits.

So, whether you’re confronting the spectre of repossession or simply wish to sell your property, Gaffsy will buy any house regardless of the condition or history, so make an informed choice today and secure a no-obligation free cash offer. Remember, your home holds more than just bricks and mortar; it’s your sanctuary and a vital financial asset. Don’t let repossession shatter your dreams; take proactive steps to secure your financial future contact us today.

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