Getting a Mortgage with Missed Payments

When arranging a mortgage, one of the things high up on the list of priorities for people is the rate or product they are getting.  If you are in a position where you have the choice of any lender to obtain your mortgage then you will be in the fortuitous position of being able to choose the right option to suit your individual needs.  However on occasion the pool of choice may be reduced due to a multitude of reasons such as, affordability, amount of deposit or equity, and for some the credit rating. With the latter, the credit could be affected by missed payments and if so could in turn result in a higher interest rate being offered and possibly a larger deposit or greater amount if equity being required. The severity of the missed payments such as how many, when they occurred and what they were for will be determining factors in this.

Should it be the case that at the time of your application you have to arrange your mortgage on a scheme that is less favourable than that if your credit rating was in good order, then hopefully in time, by improving your credit history, you will put yourself in a position of having greater choice and hopefully as a result better suited mortgage deals.

When you have a record of missed payments on your credit file you still want to ensure you are getting the best and most suited mortgage for your needs.  With each and every lender applying their own individual way of assessing the credit worthiness of those with missed payments there is no definitive list of best mortgage lenders that can be given.

Certainly the more severe the missed payment history the greater expectation of a lesser choice of lenders that will be available to choose from however, with the right research, the best mortgage lender for your specific situation should still be found. Using an experienced mortgage broker who specialises in this sector can pay dividends when finding the best lender as they will be able to use their knowledge of the market to ensure that you obtain the right mortgage not only now, but also to give you a plan of action for your future plans and requirements.

Having missed payments on your file will likely effect your credit score however, your overall score will take into consideration your total credit picture. For example, if you have a one off event where you have missed a payment but the rest of your credit file is exemplary then it is unlikely that your score will be affected. However if the missed payments are regular and or more recent, then expect this now to have much more impact on your overall score.

Do bear in mind, that when applying for a loan or mortgage each lender will make its own assessment of your credit rating and not simply take that as given by any of the recognised credit reference agencies.  What may be indicated as a poor score from a credit reference agency may still not be a barrier from obtaining a mortgage.

The simplest way to answer this question is just to say the more historic it is the better however, although this likely bears true in most circumstances, all is not necessarily that straight forward.  How old missed payments need to be before you can obtain a mortgage will very much be determined by what it is in relation to and how much deposit or amount of equity you have. Secured loan or mortgage payments will, in relation to their unsecured counterparts, need to be more historic and or require you to have a larger deposit or amount of equity.

Although criteria is ever changing the following gives an indication of how the market works.  We do however still recommend that in all instances you contact us. Our expert advisers will always be abreast of what is relevant at the time and be best placed to ensure you get the right advice for your own individual circumstances.

Unsecured

Secured

Missed payments are treated in exactly the same way as all other information on your records and will stay on your credit file for 6 years. Although the information will remain on file for this amount of time, lenders will tend to be more sympathetic towards those missed payment entries that are more historic.

Do also make sure that any records entered on your credit file are correct. For example a missed payment can be dealt with more severely by a lender to an entry recorded as a late payment. 

Any late or missed mortgage payments are viewed very seriously by a lender.

This is because when money is tight, the mortgage is generally the last payment to be missed as, for most people, it is the most important.

If there are, say, a couple of late mortgage payments on your credit report and they occurred several years ago it will have less impact than if a number of payments were made late or missed in the past couple of years.

If you are currently in arrears with your mortgage payments, you are highly unlikely to be awarded a new mortgage.

Late and missed payments stay on a person’s credit record for six years. When it comes to making a fresh credit application the older they are, the better.

If the case of more recent late or missed payments – say within the last couple of years – it’s not that you won’t be considered, necessarily, it’s more that you will have fewer options. The loan-to-value ratio offered is likely to be lower and the interest rate and fees higher. Provided your mortgage payments are currently up to date then your overall credit rating will likely be the deciding factor.

Possibly. It depends on whether that payment continues a trend of late and/or missed payments or was a one-off with mitigating circumstances.

If it continues a trend, and you are currently behind on your mortgage payments, then your chances of being approved for a new mortgage deal are slim indeed.

If it was unusual and there was a good reason for it, then your chances are much better. Incidentally, if it was the latter, it’s worth contacting the UK’s main credit reference agencies – Callcredit, Equifax and Experian – and explaining the situation. They may be prepared to enter a note of correction on your record explaining what happened, which should help with future credit applications.

Either way, a specialist mortgage broker will be able to offer expert advice.

Typically no, this will be classed as a late payment, as it was made after the due date had passed. If it is noted on your credit report, it will usually have the number ‘1’ next to it, indicating that the payment was made in the month after it was due.  This could still apply even if you made the payment in the same calendar month that is was due.

The good news is that if you pay a bill a few days late it might not even show up on your credit report. To know for sure, request copies of your report from the UK’s three main credit reference agencies, Experian, Equifax and Callcredit.

The amount of missed payments you are allowed before a repossession order is issued can depend on your lender and the situation. The typical maximum amount of payments that can be missed is six. It is advisable that you contact your lender as soon as possible if you are failing to maintain your mortgage payments.

Missing your mortgage payments can result in severe consequences including repossession. As all mortgage illustrations and offers will quote, you can lose your home if you fail to keep up payments on your mortgage. Missed mortgage payments can also hugely affect your credit rating and therefore are likely to cause issues obtaining further credit in the future. The record of any missed payments will remain on your credit file for six years.