Can a Mortgage Be Declined Due to Late Payments?

Simply put, yes; late payments can cause serious issues when it comes to your mortgage application. This is because a history of late payments suggests you have difficulties managing your money. The more recent the late payments, the more weight they will carry. Whilst many lenders will put the odd late payment down to human error, regular and recent issues will lead them to question your affordability.

More than that, many lenders have strict and specific criteria when it comes to their borrowers which can result in instant rejection if not met. As a result, a declined mortgage due to late payment isn’t necessarily the end of the story. Finding a specialist bad credit lender who understands your situation and is more sympathetic may enable you to find the finance you need.

How Do Late Payments Affect Credit Score?

Late payments are less serious than missed payments and defaults, but they do still have an impact on your credit score. Late payments can only be recorded on your credit file if the payment is more than 30 days late, so you don’t need to worry about simple mistakes of a few days or so. Recent and frequent late payments, however, can add up and adversely affect your credit score for up to 6 years, after which point they will be wiped.

How Do Late Payments Impact Mortgage Approval?

Late payments can impact your chances of getting approved for a mortgage. The degree to which your chances are affected will depend upon a number of factors.

Lending Criteria

Many mortgage lenders have specific criteria they look for when assessing a mortgage application. Failing to satisfy these criteria can result in instant disqualification, even if in all other ways your application is good.

Type of Account

The type of loan your late payment relates to will also be a factor in the lender’s decision. A late payment on something like a utility bill will often be ignored and put down to a simple mistake. This is because it’s quite common for people to fail to change their addresses when moving, but this isn’t necessarily seen as reflective of the applicant’s affordability.

On the other hand, a late payment on a secured loan like a previous mortgage will be seen as a more serious incident and will certainly give many lenders cause for concern.

Number & Recency

The higher the amount of late payments on your credit report, the lower your score will be. If these marks are close together and recent, the lender is going to start seriously questioning your ability to manage money and handle an additional toll on your finances. Some lenders will require a clean credit report for at least a year to consider you; others may be happy as long as you are paid up and no longer in arrears.

How Long Do Late Payments Stay on Credit File?

As with most things that get recorded on a credit file, late payments will stay there for any lender to see for 6 years. After this point, you can forget they ever happened. If 6 years is too long to wait, there are lenders out there who will ignore any incident more than 3 years old. For advice specific to your situation, get in touch with our specialist bad credit mortgage advisors.

Can I Get Late Payments Removed from My Credit Report?

There are ways to get late payment removed from your credit report in specific circumstances. A ‘Goodwill Adjustment’ request can be made to a lender if you are a longstanding customer and have a perfect credit score otherwise. You can also dispute a late payment mark on your file if you believe it to be inaccurate and can prove it either wasn’t paid late or the wrong amount was requested. Finally, you can also persuade some lenders to remove a single late payment mark if you agree to sign up for direct debits going forward, ensuring you will not be late again in the future.