Can a mortgage be declined due to late payments? Mortgages with late payments FAQ

About this guide

If you have late payments on your credit file, you may be worried about your chances of mortgage success. Maybe you’ve been declined already, and your late payments were the reason. Though late payments can have an impact on your credit score, they don’t mean you’ll never get a mortgage. In fact, many specialist bad credit lenders understand that mistakes happen, and will ignore late payments if all other information looks promising.

The Mortgage Heroes have helped future homeowners from all backgrounds find the right mortgage for them. Whether you’re a first time buyer, a foster carer, or a contractor, we can help you navigate the complex mortgage application process and achieve the home of your dreams.

In this blog, we answer some of your frequently asked questions about how late payments affect mortgage applications.

Can I Get a Mortgage with Late Payments?

Late payments can make the mortgage process trickier, but it’s definitely still possible to get approved. Many lenders will look past the odd late payment years ago, putting this down to a simple mistake – lenders, after all, are human too! If you have a large number of late payments and they are more recent, the impact on your credit score will be greater.

The likelihood of you being approved for a mortgage will depend upon various factors, such as the type of loan the late payments were for, and the size of deposit you are putting down.

For example, if you’re a first-time buyer looking for a 95% loan, you may struggle to gain approval if you have any blemish on your credit score because this type of mortgage is high risk for the lender. They may, consequently, demand perfection. On the other hand, if you are applying for a mortgage with a larger deposit and therefore a smaller Loan to Value (LTV) ratio, a few late payments on your credit report will cause less of a problem.

See more: Loan-to-Value (LTV) – Understanding Loan-to-Value & How it Works

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What To Do If You’ve Had a Late Payment

  • 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 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.

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.

What To Do If Your Mortgage Has Been Declined Due to Late Payments

If your mortgage application has been declined due to late payments, the most important thing is not to panic.

Perhaps you are desperate to make an offer on a property and this declined application is a spanner in the works. Even so, a rushed reapplication will not help your situation; in fact, it may make matters worse. This is because every time your credit report gets reviewed by a lender, it is recorded as a hard search.

Future lenders are likely to see repeated hard searches close together as a red flag. This, coupled with the late payments, is not going to look good.

Instead of panicking, take a step back and breathe. Expert advice can be invaluable at this time, helping you understand where you went wrong, identify ways you can strengthen your application, and seek out a lender more likely to have sympathy with your case.

Specialist mortgage brokers can help you understand how lenders view your information and offer access to those dedicated to providing bad credit mortgages.

Specialist Late Payment & Bad Credit Mortgage Brokers

Here at The Mortgage Heroes, we understand that no one’s perfect – and neither is their credit score! We’re experts in the field of bad credit mortgages, and have helped many people in situations like yours get hold of the finance they need to buy their home. Whatever the state of your credit file, contact a member of our team today and we can chat through your options.

We can help you find a mortgage. Contact a mortgage hero today.

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*Your home may be repossessed if you do not keep up repayments on your mortgage.