Late Payments and Mortgage Applications

Worried that having late payments might ruin your mortgage plans? The brokers we work with can help you get approved.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 15, 2021

If late payments appear on your credit report, you may be finding it hard to get a mortgage. But don’t despair. Whilst some mortgage lenders may decline your application because you’ve had late payments previously, others may be more accommodating.

Depending on the extent of your late payments and the circumstances around them, it may well be possible for you to get a mortgage, and in this guide, we’ll explain how that’s possible.

Can you get a mortgage if you’ve missed payments?

Yes, it’s certainly possible but it can be difficult depending on the severity and circumstances. The key challenge is finding the right lenders who have experience in helping people in these types of situations.

Is there a difference between late payments and arrears?

Late payments are one-off payments that you’ve missed on any type of credit account that remain on your personal file but have since been paid. You are classed as being “in arrears” if you owe more than the payment you made for a particular month and haven’t yet paid the difference.

Missed mortgage payments become arrears that can build up and make you fall further behind as the months go on. If you missed a single month and paid the missing sum shortly after, this would only show up as a status of one on your account.

If you continue to miss payments, they will add up on your credit report. The more months you miss, the larger impact it will have on your credit score.

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How to get a mortgage with a history of late payments

Firstly, you should find a mortgage lender who specialises in borrowers who have bad credit, and this will minimise your chances of being declined or ending up with unfavourable rates.

Mortgage lenders on the high street might penalise you for having a history of late payments and view you as a high-risk borrower, but a bad credit mortgage provider is more likely to take a more open-minded view of your application and judge it on its overall strength.

Specialist lenders often look at the circumstances surrounding your late payments and make a lending decision based on the age, amount and reason for them. The older they occurred, the better, and most mortgage providers will likely be more accommodating if there’s a legitimate reason behind them.

To find the right bad credit mortgage lender, using a specialist broker is recommended, and this is something we can help you with. We offer a free broker-matching service that will quickly assess your needs and circumstances to match you with a bad credit mortgage advisor who helps people get onto the property ladder with a history of late payments every day.

Lending criteria

The criteria for getting a mortgage if you have late payments on your file will vary between providers. When a lender is assessing your mortgage application, they will focus on the following:

  • How recent the mortgage late payments were.
  • Whether you are now up to date with your payments.
  • If the underlying issues are now resolved – for example, have you found a new job if you were previously unemployed?
  • The size of your deposit – higher is better in these situations. Anywhere from 15%-25% is a good starting point
  • Whether you have any other credit issues against your name – for example, unpaid credit card bills or missed bill payments.

Will the number of late payments affect your application?

Yes. When assessing your application, mortgage lenders will take into account how many late payments you have made.

If, for example, you only have one late payment on your record, it is unlikely you will struggle to get a mortgage. It will be even less likely if you resolved the issue and paid the missing payment shortly after it was due.

What if my mortgage has been declined due to late payments?

Your mortgage application might be declined if you have made late payments in the past. The first thing to do is not panic. Just because one lender has declined you, it doesn’t mean all mortgage providers will.

However, if you have a reasonable explanation as to why you have missed the payments, such as redundancy, prolonged illness or bereavement, there are several lenders who are willing to consider new applications.

If you’ve already been declined, you can’t afford any more setbacks as too many requests for credit in a short period of time can put potential lenders off.

Be sure to seek professional advice from a mortgage broker who’s an expert in bad credit cases before you re-apply – they can advise you on whether there are grounds to appeal against your lender’s decision to decline you, or even find you a much better deal that you qualify for elsewhere.

Get matched with a bad credit mortgage broker today

If you’re worried that late payments might impact your mortgage plans, the best place to start is by speaking to a mortgage broker who specialises in bad credit.

The right broker can offer you bespoke advice about your application, help you optimise your credit report and make sure you’re introduced to the lender who’s most likely to approve you.

Our free broker finding service can help you find the ideal broker for you. It will match you with an advisor based on your needs, circumstances and the specifics surrounding your late payments. This will boost your chances of mortgage approval and could help you save time, money and potential marks on your credit report in the long run.

Call 0808 189 0463 or make an enquiry and we’ll set up a free, no-obligation chat between you and your perfect bad credit mortgage broker today.

FAQ's

What happens if I make late payments on my mortgage?

The consequences of making a late mortgage payment will vary depending on your lender. Potential repercussions include penalty charges and negative marks on your credit report, but most lenders offer a 15-day grace period before registering a late mortgage payment.

If you are struggling to make payments, it is always a good idea to communicate with your lender as soon as possible. They may be able to help you work out a payment plan or at least inform you of any penalties you may incur.

Telling your lender as soon as possible will also help to minimise the impact on your credit report too.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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