Late Payments Mortgage (UK)

There's no doubt that having late payments on your credit report can ring alarm bells for mortgage lenders. After all, a mortgage is a big responsibility and lenders want to be sure that borrowers are up to the task.

Your credit history is one of the first things that a lender will look at when you apply for a mortgage, so it's important to make sure that it's in good shape. It acts as a financial snapshot of how you've managed your money in the past and helps lenders to assess your ability to repay a mortgage.

Getting approved for a mortgage with late payments, or even missed payments, might not be easy, but don't despair – there are still options available to you. Your best chance of approval (and getting the best mortgage deal) will be by working with mortgage brokers who are experienced in dealing with applicants with credit issues.

At Echo Finance, we have a team of mortgage advisors who have helped many people with late payments get the mortgage they need. We'll work with you to understand your financial situation and find a lender who is willing to consider your application.

What is a late payment?

In the UK, a late payment is classed as any payment that's been made after the due date. That being said, there's generally a grace period of a few weeks where if you contact your credit provider and explain your situation, as well as make your payment, they may be willing to waive any late fees and remove the late payment from your credit report.

If you don't contact your credit provider and make arrangements to repay the amount outstanding, this will be recorded as a default (late payment) on your credit report.

What should I do if I have a late payment?

If you have missed or late payments, the first thing you should do is check your credit file to see if there are any inaccuracies. You can access your credit reports for free with the main credit reference agencies. Contact your credit provider and explain the situation, make the payment and ask for the late payment to be removed from your file.

• If you have a good credit history but have had one or two late payments, this is not necessarily a reason for your mortgage application to be rejected. However, you should be prepared to explain the circumstances that led to the late payments when you apply for a mortgage.

What if I missed a payment?

Late payments can quickly become missed payments, and this is where things start to get more serious. If you have a missed payment on your credit report, it will stay there for six years and will have an impact on your ability to get a mortgage with a high street lender.

Lenders view missed payments as a sign that you're not reliable when it comes to repaying debts, so it's important to try and avoid them if you're planning on applying for a mortgage.

The impact of late payments on a mortgage application

When you apply for a mortgage, your lender will carry out a credit check to see how you've managed your finances in the past. They'll look at things like whether you've kept up with repayments on previous loans, credit cards and other bills.

If they see that you have missed or made late payments in the past, this could put them off approving your mortgage application.

Lenders view late payments as a sign that you might struggle to keep up with repayments on your mortgage, so it's important to try and make sure that your credit history is as clean as possible before applying for a mortgage.

Improve your chances of mortgage approval

If you're worried about the effect that late payments might have on your mortgage application, there are a few things you can do to try and improve your chances of being accepted:

• Check your credit file for any inaccuracies – If you spot any late payments that you know you actually made on time, you should get in touch with the credit reference agency and ask them to update your report.
• Explain your circumstances – If you have any late payments on your credit file, be prepared to explain the circumstances to your lender. If there were extenuating circumstances, like illness or unemployment, that led to the late payments, this could help to convince a lender to approve your mortgage application.
• Build up your savings – Having a healthy savings pot can help to offset the risk of late payments for lenders. If you have a good deposit saved up, this will show that you have the ability to make regular mortgage repayments even if your income fluctuates.
• Consider a guarantor – If you're struggling to get a mortgage because of late payments, you could ask a friend or family member to act as a guarantor on your loan. This means that they'll be responsible for making the mortgage repayments if you can't, which could help to convince a lender to approve your application.
• Look at specialist lenders – There are a number of specialist lenders who might be willing to approve your mortgage application even if you have bad credit. However, you will probably have to pay a higher rate of interest if you go down this route.

Will a bigger deposit help me get approved if I have late payments?

Yes! Having a bigger deposit saved up will help to offset the risk of late payments for mortgage lenders. They'll see that you have the ability to save and be more responsible with your finances. Having a healthy deposit shows that you're committed to the property purchase and are less likely to default on the loan.

A larger deposit will also help to reduce the amount you need to borrow from the lender, which could make it more likely that your mortgage application will be approved.

So, if you're worried about late payments affecting your chances of getting a mortgage, it's definitely worth trying to save up as much as you can for a bigger deposit.

Do all lenders reject applications with late payments?

No, there are specialist lenders who may be willing to approve your mortgage application even if you have bad credit. However, you will probably have to pay a higher rate of interest if you go down this route.

Bad credit mortgages are not available from high street lenders, so you'll need to look for a specialist provider if you're interested in this option. An experienced mortgage broker can help you to find the right lender, and find the right mortgage deal for your circumstances.

If you're worried about your credit score, it's a good idea to check your credit report before you apply for a mortgage. This way, you can see exactly what information lenders will be looking at when they assess your application.

When are late or missed payments removed from your credit record?

Late or missed payments remain on your credit record for six years. However, the impact of late payments will lessen over time, as long as you continue to make all of your payments on time.

A mortgage lender will be interested in the age and severity of the credit issue, as well as your current credit score. So, if you have a late payment that is several years old, it's less likely to impact your mortgage application than a more recent one.

If you're worried about the effect of late payments on your credit score, you can check your credit report to see exactly what information lenders will be looking

If you have a late payment on your credit file, be prepared to explain the circumstances to your lender. If there were extenuating circumstances, like illness or unemployment, that led to the late payments, this could help to convince a lender to approve your mortgage application.

Making late payments on your mortgage

If you're already a homeowner and you've started to fall behind on your mortgage repayments, it's important to take action as soon as possible.

The sooner you get back on track, the less damage will be done. It's important to know that as a mortgage is a loan secured on your home, a late mortgage payment has bigger consequences than if you miss a credit card payment, for example.

If you're struggling to keep up with your mortgage repayments, you should get in touch with your lender as soon as possible. They might be able to offer you some support, like a repayment holiday or a change to your repayment schedule.

Speak to a mortgage advisor

If you're worried about your credit rating or you're not sure what mortgage you can afford, it's a good idea to speak to a mortgage advisor. They'll be able to help you to understand your options and find the right mortgage for your circumstances.

At Echo Finance, we have a team of expert mortgage advisors who can help you to find the right mortgage, even if you have bad credit. We'll work with you to understand your financial situation and find a mortgage that meets your needs. Get in touch today to speak to one of our advisors.