The problem is the outstanding shortfall. Many lenders are only prepared to advance a loan to someone who has suffered repossession where they can be sure any shortfall has been paid off several years previously and there is a recent track record with a clear credit profile.
Past problems should have been resolved and the financial situation significantly improved. In many cases, this will have been achieved through a personal loan which may be expensive in the short term, but would allow ‘credit repair’ to take place enabling a fresh start.
The non-conforming sector could find a lender perfectly willing to make a loan, provided the arrangement to pay the shortfall has been well conducted and the client can demonstrate the ability to pay both the shortfall arrangement and a new mortgage payment. Calculations based on affordability and an individual underwriting judgment may be the solution. The rate may not be the keenest two-year fix without a redemption tie-in, but it should not be massively penal either and would represent the best way to return to the owner-occupation trail.