Can I get a mortgage with Late Payments?

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Article created by Christian Duncan, Director – Mortgage and Protection Adviser
Last updated 21st December 2023

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How to secure a mortgage with Late Payments?

Life happens, and sometimes, despite our best intentions, we end up making late payments on our bills. For many prospective homeowners, the looming question is how these late payments might impact their ability to secure a mortgage. Understanding the intricacies of mortgage applications and the role of one’s credit history is paramount in maximising your chances of getting a mortgage.  Even if you’ve had a few financial hiccups along the way.

Understanding Late Payments and Their Implications

Late payments are not to be confused with missed payments or arrears. In essence, a late payment is a payment that was completed, albeit not within the expected time frame. This distinction is crucial for understanding its impact on your credit file. Let’s dissect the differences and how they permeate the mortgage application process.

Can You Still Get a Mortgage with Late Payments?

Yes, it’s possible to secure a mortgage with a history of late payments. While such instances may complicate the process compared to those with pristine credit histories, finding the right lender who’s open to examining your individual circumstances can make all the difference. Late payments can be a red flag for lenders, as they suggest potential money management issues; however, the reasons behind those late payments and the measures taken afterward to rectify the situation are significant factors that lenders consider.

Types of Late Payments: Secured vs. Unsecured

It’s essential to note that not all late payments are weighted equally. Secured late payments—those tied to collateral like a home or a car—carry more gravity than unsecured late payments—like those on credit cards or personal loans—due to the potential repossession of assets.

The Duration of Late Payments on Your Credit File

A late payment will remain on your credit file for six years, but it can only be reported if it’s overdue by 30 days or more. If there’s an error or if a late payment has been erroneously marked on your file, you do have the recourse to ask the company to remove it, especially if there’s a sound reason for the delay and the payment has since been cleared.

Could Late Payments Lead to Mortgage Decline?

While some traditional banks may decline a mortgage application due to late payments on your credit report, this isn’t the end of the road. The weight of a late payment diminishes with time, and depending on the number and severity of these infractions, specialist lenders may be more lenient, especially if they’re older issues.  Speaking with a mortgage broker that specialises in bad credit will be your key to success if you’ve already had a mortgage decline.  

How Single Late Payments Affect Your Credit Score

Timeliness in paying bills is a significant contributor to your credit score. Therefore, a payment that is over 30 days late can have a detrimental effect. However, like all credit issues, the impact lessens as time passes, and having a reasonable explanation can be advantageous when applying for credit.

When Mortgage Payments Are Missed

The implications of missing a mortgage payment can be significant and signal to lenders that you might be high-risk. However, lenders typically offer a grace period, during which it’s best to communicate openly with them to explore possible solutions rather than allowing the situation to escalate towards default and possible repossession.

Steps After Mortgage Arrears

Lenders prefer an applicant with a solid track record of timely mortgage payments. Should you have any arrears, speaking to an expert—particularly a specialist mortgage broker—could help highlight your options and improve your chances of being approved for a new mortgage despite past difficulties.

Improve Your Odds: Tips for Those with Late Payments

Obtaining a mortgage requires a sound credit report. Here are some actionable tips to boost your credit score and improve your chances of mortgage approval:

  • Review Your Credit Report: Access your credit report through credit reference agencies like Equifax, Experian, and TransUnion.  Using a service like checkmyfile will enable you to access all three in one report.
  • Get Registered: Being on the electoral roll can positively affect your application.
  • Manage Your Debt: Illustrate responsible credit usage and avoid maxing out your credit lines.
  • Beware of Fraud: Always verify the authenticity of the entries in your credit report.
  • Organise Your Bills: Ensure you’re named on bills that you contribute to.
  • Space Out Applications: Limit the number of hard credit inquiries in a short span to avoid suspicion of financial distress.  Dont put your trust in a mortgage broker who doesn’t fully understand bad credit mortgage applications.  This could have an adverse effect on your application and credit profile.  
  • Assess Financial Associations: Disassociate from joint accounts that might be negatively impacting your credit.

Final Takeaways

Adopting these practices and working with a qualified mortgage broker.  Especially one  specialising in complex financial scenarios can significantly elevate the likelihood of turning your dream of homeownership into a reality despite the presence of late payments.

Late payments don’t necessarily close the door on your mortgage aspirations. By understanding how they work and taking proactive steps to mitigate their impact, you place yourself in a more favorable position. Remember, when in doubt, consulting with mortgage experts can provide clarity and pave the way towards a successful mortgage application.


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