Can late payments affect a mortgage application?

Whilst some lenders are more lenient than others, late payments will always affect your mortgage application to some degree.

If you miss a payment on any form of credit, it stays on your credit file for six years regardless of how quickly you have caught up. The likelihood is that this will have a negative impact on your credit rating, especially during the first few years.

Still, it all depends on you and your individual circumstances as to how difficult this will make getting a mortgage.

Below, I've tried to cover how late payments can affect mortgages ‘in general’. But in the end, you’re always best contacting an independent mortgage adviser for advice on what to do next, in regards to your specific situation.

How late payments affect your mortgage application

When you apply for a mortgage, the lender looks into how you have managed your past credit.

Using this and other information, such as your occupation and income, they make a judgement on how likely you are to keep up with your mortgage payments. In general, the better you have managed your credit commitments, the better your chances of being approved become.

Owning a car on finance won’t stop you getting a mortgage. But if you miss any payments on the agreement, then it turns into a different story - same goes for all credit commitments.

Lenders really tightened up their approval criteria following the recession and the crash in 2007. If you have any missed payments on unsecured loans or credit cards, then you will be flagged as a higher risk to the mortgage lender.

The more flags on your assessment, the more likely it is that your mortgage won’t go through.

And some ‘flags’ are a bigger issue than others. For example, 2 missed payments on a car for £200.00 will be taken much more seriously than a missed phone bill at £30.00.

Also, the more recent the missed payment, the more of an impact it’ll have.

Any late payments on an old mortgage can seriously damage your remortgage chances, or any future mortgage applications.

Like I said earlier, every case is different. And it’s important to seek professional advice on yours.

I’ll touch on that some more at the end of this post but the next section may give you an idea on how you can approach the situation…

Things to consider regarding your mortgage and late payments

No matter what your circumstances are, you’ll almost always improve your chances of approval by having a large deposit.

The larger it is, the less risk to the lender therefore the more likely they are to consider your application.

It’s not a guaranteed ‘way out’ because lenders look at a range of factors, not just your ability to make payments on time, but it’s worth keeping in mind before submitting any application.

If you keep getting denied for a mortgage because of late payments , it can help to wait until that particular ‘black mark’ disappears from your credit report, although this could be as long as six years.

Two simple things to do before applying for a mortgage

David Hollingworth, Head of Communications at London and Country, says we should consider everything in our financial histories before applying for a mortgage.

“The tightening in lender criteria has meant that there has been less flexibility for those that have suffered a blip in their credit history on the high street. It’s important to get back on track as soon as possible and build up a history to demonstrate that it was just a blip. Even when mainstream lenders can’t help there could be an option from a specialist lender, although expect interest rates to be higher.”

Save yourself time and hassle by taking these two steps before submitting a mortgage application:

  1. Check your credit report for free using ClearScore
  2. Discuss your individual situation with a broker
If you want the best possible advice for your specific circumstances, then I’d recommend getting fee-free advice by calling our advisors on 0800 953 0304 (or 0330 303 0036 from your mobile).

A good broker will match your profile with the best available mortgage options, before helping you decide on what to do next.

The reason I recommend this so strongly before applying, is that if you keep getting rejected by lenders, then this can further damage your credit rating.


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