Late payments may have had a negative impact on your credit history and you are probably wondering how that affects your chances of getting a mortgage. It may prove harder to find a lender but there will be one out there, you just need one of our mortgage a superheros to guide you to the right one.
Follow our guide below to understand how your late payments are assessed.
A late payment is one that has missed the due date but has been paid. Even if you do satisfy the debt the late payment will stay on your credit file for 6 years. The payment will have a number to indicate how many months late the payment was. So, if you failed to make the payment for 2 months the number 2 will stay on your file.
There are two types of borrowing – secured and unsecured. Lending that is linked to a car, property or other asset is secured as the item could be seized if payments stopped completely. A utility bill or credit card would be deemed as unsecured. Missed payments for unsecured borrowing can be viewed as less serious by the lender if only a small amount exists and a certain amount of time has passed. In general, the more recent your late payments are the less flexible the lenders will be.
If you have financial difficulties and you are struggling to meet your payments, the best thing to do would be to contact your provider as soon as possible. They will be willing to work with you to find a solution before any further damage is done and your credit file is jeopardised significantly.
If you do miss a payment, rectifying it as soon as possible is key to maintaining a good credit score. Credit reports show lenders how you conduct your finances and how well you pay for your current and past financial agreements. So late payments on your report could indicate that you are likely to do this again and therefore could lead to future declines from lenders.
A lot of lenders consider a mortgage payment late once 7-15 days have passed since it was due. However, most lenders will allow borrowers a grace period until the end of the month to make the payment until they register it as a formal missed payment on your credit file.
Lenders will usually add a late fee to your monthly amount if your payment is late or if you are in arrears. Each mortgage lender will have their own charging structure so the amount can differ. Most will enforce court proceedings to repossess your home if your arrears are for 6 months or longer.
No, late payments are individual occurrences that have been paid and settled, whereas arrears are where the borrower still owes more than one month of payments. These start to affect the status marks on your credit report and will be recorded as 2,3,4,5,6 etc.
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I applied for a mortgage from another organization after seeing an excellent offer online, but my application was declined due to my credit history. I am grateful to MoneyNest for connecting me with their broker, who discovered out what the problem was and now I am a client of theirs 🙂
I had a bad credit history and didn’t know how to apply for a mortgage. The superhero advisors from MoneyNest came into my life when they matched me with an agent who found the perfect lender willing to take on such risk, giving us both hope that there are still opportunities out here!
It is possible to get a mortgage with late payments on your file, but you will need specialist advice from a bad credit broker, as many of the lenders considering these mortgages are not available directly to the general public. Each individual situation will receive a unique outcome when it comes to bad credit so it is important to understand what lenders will investigate when assessing your eligibility and affordability.
Mortgage providers will consider the following factors:
It is key that you gather as much information as you can from your credit report so we recommend you download your report from all three major credit reference agencies. You can search your own file multiple times without it affecting your score, but be wary of multiple checks from lenders as this can be a detriment.
If you have been declined due to the late payments on your credit report there is a chance you could secure a mortgage with another provider. Do not panic and try another lender straight away as two declines in a row on your file could do a lot of damage to your chances.
Take your time and talk to one of our specialists as they will be able to advise you on the next steps. Our superheroes know which lenders are likely to accept your case from experience so do not shy away from trusting us with your next application.
Some bad credit lenders only use brokers for their applications and so our experts may have links to lenders you have not had access to before.
Our superheroes have experience helping customers with the following:
Mortgage arrears can deem future mortgage applications difficult as lenders view them as one of the most severe types of credit issues. Lenders will view you as a larger risk as usually someone who is struggling will stop paying bills that have the least amount of impact on their daily living. So, to stop paying for the roof over your head may mean you have entered into serious financial difficulties.
Payments usually stop in the following order, and as such, lenders tend to view each with increasing severity:
However, if you can give explanations as to why you have slipped into arrears such as loss of income, a bereavement or a prolonged illness then some lenders could be flexible and allow new mortgage applications.
Lenders will consider the following factors:
You may need a minimum deposit amount of 15-25% for a new mortgage application if you are up to date on your mortgage but have arrears on your credit report, although often there are lenders considering less than this in the right circumstances. If you are still currently behind on your payments then you are very unlikely to be accepted for a new mortgage application. If this is the case you may wish to explore consolidating your debts into a secured loan, but you will need sufficient equity in your property to do this.
The rate that you will be offered will be subject to your individual circumstances. The table below indicates a range of deals based on a mortgage amount of £150,000 over 30 years. It is best to seek advice from the superheroes we have on standby to find a deal tailored to you. Follow the links to contact us and let us help you today.
Make an enquiry for a free, no-obligation chat and we’ll match you with a broker experienced in helping other customers in similar circumstances
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