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Mortgage after late payments

Last updated on 17th January 2024 by Martin Alexander

Getting a mortgage after late payments can seem like an uphill struggle. Many people miss the odd payment in their lives, and it’s rarely done intentionally.

Mortgage approval with late payments isn’t as difficult as you think. Late payments aren’t considered a severe credit issue, especially if they only happened once or twice. That said, records on your credit file in the past 12 months can cause concern.

Some lenders have strict regulations and will decline a suitable applicant because of a recent missed payment. Going on to appeal the decision, as the missed payment was a simple error, can be frustrating and time-consuming. Delays in your mortgage offer can even result in estate agents accepting a different offer on a property.

Some lenders consider applicants with late payments. Choosing the right lender from the start can save you a lot of frustration.

Can I get a mortgage with late payments on my credit file?

You can get a mortgage with late payments on your credit file. Missing the odd payment shouldn’t stop you from getting a mortgage, especially if you’ve caught up with your payments. However, you can run into issues if you have multiple late payments on your credit file in the last 12 months and have over £1000 debt.

Some lenders are stricter than others, so you should speak to an advisor to determine which lenders you’re eligible for.

What should I do if I’ve had a late payment?

If you’ve made a late payment or missed several payments, don’t apply for a mortgage until you’ve checked your credit score. You should also make your payments before applying. You may struggle if you apply for a mortgage with missed payments on your credit file.

Don’t panic. With the right advice, missed payments can be rectified. Once you’ve made your payments, ensure you have evidence of having made that payment. This is so that you can show lenders if they pick it up during your mortgage assessment. It’s always advised to minimise as much outstanding debt as possible before applying for a mortgage, even if it is a small payment such as a phone bill.

Are late payments the same as arrears?

Late payments and arrears are separate circumstances and should not be treated the same. Payments may have been missed and then paid late. More importantly, the payment has now been made.

If your payment was due on the 1st and then paid on the 10th, creditors usually won’t register this as a missed payment, as the payment was made before the next payment was due.

Arrears are where payments fall behind consecutively. For example, your due date is the first of each month, but you’ve missed the last three months. This would mean that you’re now three months in arrears. Arrears will likely be registered as defaults on your credit file and could affect your credit rating further.

Read more: How to get a mortgage with defaults

Should I check my credit report?

If you’ve had late payments or any other financial issue that may be registered on your credit report, check to see what’s on there.

It’s a myth that checking your credit report will leave a footprint and degrade your credit score. This isn’t true. A small footprint can be left when credit applications are made when lenders carry out a credit check.

By checking your credit file, you’ll see your credit score and the dates and values of each missed payment. Furthermore, your credit file will show you how you’ve conducted your credit over the past six years.

Lenders will carry out a credit check on you as part of your mortgage assessment, so it’s worth getting a head start. Doing so also gives you a chance to rectify any errors that may be on your credit file. You can contact your credit referencing agency to query anything you believe may be incorrect.

What might I find on my credit file?

For missed payments, credit referencing agencies usually record the following:

  • Missed payments where you’ve failed to pay a bill
  • Late payments if you pay a bill after the due date has passed
  • A default may be registered if you’ve built arrears
  • County Court Judgements (CCJs) can also be registered if your missed payments have been outstanding for several months

If your creditors have registered defaults or CCJs against you, you would have had previous notification of this. This is because, with a default, you’re given 14 days to respond. If you have a CCJ, you would have received details of the judgement involving a court hearing date.

Does the type of late payment I have matter?

The type of payment you missed has the most significant influence on your mortgage application. A missed payment will fall into one of two categories: unsecured or secured.

Unsecured late payments

Unsecured missed payments include phone bills, credit cards, personal loans and account overdrafts. In other words, they’re not secured against anything. The companies in question rely on you and your credit management to keep up with your payments.

Lenders tend to be more lenient if you’ve missed payments that fall into this category. Although it can still affect your application, some lenders may see past this and offer you the same products as everybody else. Nonetheless, you must apply with a mortgage lender that accepts late payments.

Secured late payments

Secured missed payments would include mortgages and secured loans. This is when the debt is secured against something, such as a property or an asset. For instance, when you take a mortgage out, the lender secures the debt against your property. Lenders can take the house back as collateral if payments aren’t made.

Lenders tend to be less lenient if you’ve missed payments that fall into the unsecured category. This is especially true when missed payments are recent and frequent. Although a mortgage is possible, you may require a higher deposit than usual due to missed payments on your credit file.

How recent were your missed payments?

Perhaps one of the most influential things in your assessment regarding missed payments is when they occurred. If you’ve fallen behind and are now in arrears, then your chances of approval will be far lower than if your payments were missed a few years ago. This becomes more apparent with smaller deposits.

Most lenders will require a clean credit file for at least one year. This is because lenders will see you as a higher risk when compared to someone who hasn’t missed any payments.

Even if you recently missed payments but are now up to date and no longer in arrears, you should still be able to get a great mortgage deal. If you’re still unsure, you can always speak to an expert advisor.

How many missed payments have you had?

Lenders will also assess the number of missed payments you’ve encountered. Having missed one payment a few years ago isn’t likely to affect your mortgage application. However, it may knock your credit score slightly, meaning you won’t have access to every lender or at least their best deals.

If you’ve recently missed multiple payments, a mortgage becomes increasingly difficult. That being said, you may still qualify with a specialist lender.

How much deposit will I need?

In all mortgage cases, the higher your deposit, the better. This is because lenders tend to offer the best mortgage rates with a lower loan-to-value (LTV). Approval isn’t as difficult when large deposits are involved, as lenders take less risk.

This becomes evident when you’ve missed payments and have a lower-than-average credit score. If you have a 10% deposit and missed payments as opposed to a 40% deposit and missed payments, you’re more likely to be approved with a 40% deposit.

When your credit score isn’t quite high enough for lender approval, they may offer you a lower mortgage amount. You may apply for an 85% mortgage, but the lender may only offer you a mortgage at 70% LTV.

This shows that the lender will lend to you at their LTV but not what you requested. This doesn’t mean every lender will do the same, and if this does happen, nothing stops you from exploring options with another lender.

Our expert mortgage advisors secure mortgages for all issues involving missed payments. Even if you only have a 5% deposit and have recently missed payments, getting a mortgage may still be possible.

Missed payments and bad credit

Your choice of lenders will be restricted if you have late payments on your credit file. Having further credit issues will restrict your choice of lenders even more, but it depends on how severe your other credit issues are.

It’s possible to get a mortgage with the following credit issues while having late payments on your credit file:

  • County court judgements (CCJs)
  • Bankruptcy
  • After an IVA
  • Home repossession
  • Debt Relief Order (DRO)
  • Defaults on your credit file
  • Debt Management Plan (DMP)

Some credit problems will be considered more severe by lenders, so you must be honest in your application, as the last thing you want is to be declined.

Missed payments are considered the least serious of credit problems. Depending on your other credit issues, you may require a specialist lender.

Don’t let this put you off, as specialist lenders focus solely on mortgages with bad credit. As a result, they’ll approve mortgages daily and are designed for borrowers with credit problems.

About the author

Martin Alexander
Senior Mortgage Advisor

Martin is a senior mortgage advisor who has held a CeMAP qualification for over 15 years while completing an MBA in Global Banking and Finance.