Can I get a mortgage with missed or late payments?
If your mortgage application has been declined because you have missed or late payments on your credit record, it’s still possible to get a mortgage with the right help. While many high street lenders refuse to offer mortgages to people with a poor repayment history, there are some specialist lenders which have a greater appetite for risk and may be more willing to lend.
Because there is more risk involved for the lender if you have missed or late payments, you may not be able to access the best rates and may even need to come up with a larger deposit. But, with the right help, you can still access the lenders which offer more favourable deals and terms to borrowers with a less than perfect credit score.
What are missed and late payments?
As their name suggests, missed and late payments are marks that can go on your credit reports when you are late in paying a bill or miss the payment altogether. If you miss several credit payments, this can be recorded as a default (link to default mortgages page once built) on your record, which can have a significant impact on your credit score.
When it comes to how lenders view missed or late payments, it varies on a case by case basis.
If your payment is only a few days late, it shouldn’t have too much of an impact provided the amount was repaid in full promptly. However, the longer a late payment goes on, the more damage it can do to your credit score, so you are always better making any payments as quickly as you can. In terms of missed payments, if you only have one or two on your credit record, this will be looked on by lenders much more favourably than if you have a record of missing payments over a long period.
This could also lead to a default, which can have a bigger impact and will lie on your credit record for six years.
How do bad credit mortgages work?
Bad credit mortgages are just like regular mortgages, but because there is more risk involved for the lender, they tend to come with higher interest rates and stricter limits on how much you can borrow. That’s because the risk is mitigated by the higher interest rates and larger deposit you pay.
If your credit score is high, lenders will view you as less of a risk and so your chances of getting a regular mortgage, with lower interest rates, approved are higher. If you have a low credit score – because you have missed or late payments on your credit record, for example – lenders might view you as a riskier prospect, meaning your mortgage options narrow.
There are many types of bad credit mortgages available, including fixed, variable, and discounted rates. The interest rate you’ll pay, and the amount you’ll be able to borrow will vary from lender to lender and will depend on your credit score.
How do I get a mortgage with missed or late payments?
If you have missed or late payments on your credit account, the way you respond can be crucial to your future mortgage options.
Honesty is the best policy. We all make mistakes and sometimes, there is a good reason why you may have missed a payment deadline, so let your lender know as quickly as possible if this is the case.
If you provide a reasonable explanation and don’t make a habit of missing too many payments, it shouldn’t have too much of an impact. Repaying the full amount as quickly as possible will also demonstrate to your lender that you can still borrow and repay credit responsibly. Also, the longer missed or late payments have been on your record, the less impact it will have on your chances to successfully access a mortgage with a competitive rate.
So, it is possible to get a mortgage with missed or late payments on your credit record, but you’ll need to demonstrate to the lender that you can afford the repayments and can manage your finances sensibly. Reducing your monthly outgoings and not taking on any new debt is a good place to start. The more you can save for a deposit the better, too.
Contact us for more information about getting a mortgage with missed or late payments
My Mortgage Pro is a professional mortgage information service. While we don’t give advice, we aim to provide you with simple, jargon-free, no-nonsense information about successfully applying for a mortgage with missed or late payments to help you make the right choice. We can also connect you with a specialist mortgage broker from our parent company James Alexander FS, who are authorised and regulated by the Financial Conduct Authority, who will provide advice tailored to your specific circumstances and help you find the right mortgage with missed or late payments, fast.
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