Getting a mortgage with missed payments

Securing a mortgage with missed payments

As unlimited mortgage brokers, we are able to approach lenders from across the whole spectrum of the UK market. This includes specialist lenders, for getting a mortgage with missed payments, that you won’t see on the high street. These lenders are willing to offer deals to people with a bad credit history.

There are a few factors that these specialist lenders will bear in mind when assessing your application for a mortgage with missed payments. Firstly, when the missed payments occurred, and what they related to, will have some bearing on whether a lender will be willing to help you. The amount of money involved will also influence their decision.

Can you get a mortgage with missed payments?

There is no definite answer to the question of securing a mortgage with missed payments; it always depends on your exact circumstances and the nature of the event.

We’re confident that we will be able to help you in your quest for a home loan, even if you’ve had missed payments.

As with any adverse credit issue, a diligent broker and lender will look into a number of factors, including:

• The number of missed payments
• The date(s) that they occurred
• What the payments related to
• Are they still missed, or paid off and classed as late payments?
• Any other bad credit issues on file will also be considered when assessing a mortgage with missed payments

In addition to this, other aspects of your circumstances will also come into play. Among these will be:

• The amount of deposit or equity you can put on the table in relation to the property value
• Recent and current financial behaviour
• Current commitments and debt to income ratio
• Proposed loan to income ratio

After taking all the above into account, the lender will have a good grasp of your affordability as well as your diligence in looking after your finances. They’ll then be able to make an informed decision about whether or not to offer you a mortgage with missed payments.

How do you get a mortgage with missed payments?

Being able to demonstrate your ability to make regular repayments; for example, on other lines of credit, can help you before applying.

All lenders apply slightly different criteria for applicants from one to the next. This said, making multiple applications to a number of lenders, in the hope that one of them will be amenable to your situation, is something we would always advise against. This is because it could negatively impact your chances for a mortgage with missed payments.

This is because several credit checks, by these lenders, over a short period is certain to count against you.

A great starting point is to approach an expert mortgage broker who can look at your circumstances and recommend a lender. A specialist advisor will be dealing with this kind of enquiry on a routine basis. Therefore, they will have the experience and knowledge to be able to point you in the right direction fairly quickly.

It’s likely that you’ll have to look to other sources than the high street to find the mortgage you need.

How old do missed payments need to be before I can apply for a mortgage?

Again, there is no set-in-stone answer to this, but the general accepted rule of thumb is: the older, the better your chances of being accepted for a mortgage with missed payments.

A string of missed payments on any form of finance three or more years ago will have a lot less impact than if they occurred within the last few months. However, the duration of time since they occurred is only half the story. The nature of the borrowing will have a bearing on how seriously a lender views the situation when considering a mortgage with missed payments.

For example, missed instalments on secured loans or mortgage payments require more time to pass than those on unsecured borrowing. An unsecured borrowing method could be a credit card or phone bill. Of course, with credit records only covering the last six years, any issues fall outside the scope of a credit check after that time.

Below shows the number of missed payments generally allowed by lenders within certain periods, when taken against the loan-to-value ratio of the proposed mortgage. We have done this for both unsecured and secured loans.

Please be aware that lenders’ criteria and general priorities within the financial market will shift over time. You should contact an expert advisor to get the most up-to-date perspective on your missed payments.

None – indicates no missed or late payments per credit agreement

Any – permits any number of missed or late payments per credit agreement

Maximum status 1 – this represents one missed or late payment per credit agreement

Maximum status 2 – this represents 2 missed payments per credit agreement indicating arrears. The status recorded will increase consecutively with each missed payment.

Lender criteria for getting a mortgage with missed payments

The missed payments resting on your credit files are just one aspect of your whole credit record. These missed payments may be reduced in importance according to the circumstances around the bad credit and your position on a number of other factors.

The other things a lender will look at. when assessing an application for a mortgage with missed payments, may include:

What they relate to. The nature of the loan, or type of credit you missed payments for, will have an influence on a lender’s view of your case.

Your deposit or equity amount. How much money you are able to put on the table or show that you have already invested in property. The more deposit or equity, the lower the risk to the lender, and the better your chances will be when applying for a mortgage with missed payments.

Your income and what you can afford. Lenders will look at the amount you need to borrow in relation to your income. As well as this, they’ll look at what you will be able to allocate from your household budgets for mortgage repayments each month.

The less you borrow compared to your income, the better your chances of approval for a mortgage with missed payments.

Other adverse credit issues. If you have other bad credit items on your record that could paint a poor picture of your finances and cause an additional issue. This also works the other way. If you have a clean credit history aside from the missed payments, it can benefit you.

The number of missed payments. If you only have one or two missed payments, then it’s likely a lender will understand this was probably an oversight. Conversely, a string of missed payments, will be treated as a sign you struggled to manage your budgets.

The amount of time that has passed. If your missed payments were three or more years ago, then lenders may understand that your finances are currently in a good state. However, if they were quite recent, perhaps within the last 12 months, then it could be seen as a sign you are still experiencing financial problems.

Some lenders might also take into consideration the context of the missed payments. For example, perhaps you had recently lost your job or suffered a severe injury or illness when assessing your application for a mortgage with missed payments.

Mortgage lenders if I have missed payments

Missed payments on your credit record can limit your mortgage lender options, and you may have already faced refusals from high street providers.

The specific impact depends on the nature and context of your missed payment(s). Recent missed payments on priority debts, like a mortgage, will likely pose significant challenges with most lenders.

However, older missed payments on less critical credit, such as a phone bill, might still allow for mainstream lender options when considering a mortgage with missed payments.

Generally, if your credit records feature some missed payments, you’ll likely need to work with a specialist lender and an experienced mortgage broker. Our task is to find the most favourable deal among them to meet your needs.

Though smaller than high street banks, specialist lenders are fully regulated, ensuring your mortgage and home remain completely secure. Many don’t advertise publicly, accepting applications only through trusted intermediaries like us. Enlisting a broker is therefore key.

To explore your options, please contact our team today for a free, no-obligation initial discussion.

Mortgage rates if I have missed payments

When assessing all your options, if you have a clean credit record then you’ll have a broad range of providers to choose from. You will also have access to a lot more favourable rates. Unfortunately, if you have one or more missed payments, then your choices will be reduced, and rates can be a little higher.

How much higher exactly will depend on all the influencing factors around your bad credit and your current finances for a mortgage with missed payments. The more of a risk you are viewed as, the more efforts a lender will impose to mitigate this risk.

The amount of time since the missed payment, as well as the type of missed payment, will influence the rate you’re offered. This means that the more recent and severe a payment, the higher chance of you being offered a higher interest rate. As well as a higher rate, lenders could possibly request a larger deposit or level of equity than average.

Bear in mind that a headline rate doesn’t always give you the whole picture on what you might pay in total for the mortgage. You will often find that a product with a lower rate comes with higher costs in other areas. This includes administration fees or early repayment charges.