Can I get a mortgage with Missed Payments?

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

Table of Contents

 

How to Secure a Mortgage with Missed Payments?

Applying for a mortgage can be a defining moment in anyones life, but the presence of late payments in your credit history might seem like an huge hurdle. The truth, however, is more nuanced. If you’ve ever wondered, “Can you get a mortgage with missed payments?”, the answer is not a straightforward no.  9 out of 10 client can actually secure a mortgage with missed payments.  

The Distinction Between Late, Missed, and Defaulted Payments

Before diving into the specifics, it’s crucial to clarify the difference between late payments, missed payments, arrears, and defaults.

  • Late Payment: This is a payment made after the due date but before it develops into a missed payment.
  • Missed Payment: Occurs when a bill remains unpaid beyond the due date.
  • Default: When multiple payments are missed on the same account.
  • Arrears: Signifies a state where money is owed.

Understanding these differences helps assess their varying impacts on your credit file.

Secured vs. Unsecured Late Payments

Late payments are categorised into two types: secured and unsecured. Unsecured debts, like credit cards, are considered less severe compared to secured debts (e.g., mortgages), which are tied to collateral that can be repossessed if payments are not made.

The Longevity of Late Payments on Your Credit File

A late payment remains on your credit report for six years but can only be reported if it is overdue by more than 30 days. Fortunately, mistakes can be corrected by contacting the creditor if a late payment is inaccurately listed.

Criteria for Mortgage Approval with Late Payments

While high street banks may shy away from a history of late payments, there are specialist lenders who consider individual circumstances. Here, the role of a mortgage broker becomes invaluable, offering tailored advice and connecting you with lenders with the right risk appetite.

The Outcome of a Single Missed Payment

Do not be alarmed—a single payment mishap does not spell the end of your mortgage dreams. Your credit score may dip, yet lenders recognise that issues age and hence lose their sting over time.

Missing Mortgage Payments

The real worry arises from missed mortgage payments. These highlight critical affordability concerns. Here transparency with your lender is key, from explaining genuine mistakes to catching up on missed payments before things escalate toward repossession—which, rest assured, is a last resort for any lender.  

The Role of a Mortgage Broker in Difficult Credit Situations

A mortgage broker who specialises in the bad credit sector can be your knight in shining armour. Their expertise can guide your application towards lenient lenders and present your application in the best possible light.  We have relationships with subprime lenders who specialise in helping people with bad credit secure a mortgage.  

How to Boost Your Mortgage Approval Odds with Past Late Payments

The journey to mortgage approval starts with a thorough credit check. Websites like checkmyfile can provide a panoramic view of your credit status from multiple agencies. Pay attention to the accuracy of details, ensure your electoral roll entry is up to date, manage your current credit sensibly, safeguard against identity theft, and consider pacing your credit applications.

Proactive Strategies to Improve Your Credit Standing:

  1. Regular Review: Continuously monitor your credit report for discrepancies and improvements.
  2. Name on Bills: Ensure your contributions to bills are recorded in your credit report by having them in your name.
  3. Credit Utilisation: Keep your credit usage well below limits to signal responsible management to lenders.
  4. Disconnect from Toxic Financial Partnerships: Sever joint accounts if they are linked to someone with a poor credit history.
 

In summary, late payments don’t inevitably block the path to acquiring a mortgage. With the aid of specialist brokers, corrective actions to improve your credit score, and a solid understanding of where you stand, embarking on the journey to homeownership is still very much within reach.

Addressing Common Concerns

  • Can a missed payment stop you getting a mortgage? Not necessarily, especially if it’s an isolated incident.
  • How many late payments can you have on a mortgage? This varies by lender, but the fewer, the better.
  • Are missed payments as bad as defaults? Defaults are more severe as they imply continued non-payment.
  • How many mortgage payments missed before repossession? Typically, after 90 days or three missed payments, repossession becomes a possibility, but communication with your lender can prevent this outcome.

Final Thoughts and Next Steps

Entering the mortgage application process with late payments might be daunting, but it’s certainly not a closed door. Utilise the insight of mortgage brokers, take stock of your credit, and follow the guidance of a specialist.

If you’re ready to pursue a mortgage or need further advice we are equipped to navigate you through the complexities and nuances of securing a mortgage with a less-than-perfect credit history. Embark on this journey by completing the contact form above.  

 

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