Mortgage after late payments

Securing a mortgage after late payments requires a good understanding of how lenders view your credit history, and the steps you can take to improve your chances. In this comprehensive guide, we delve into the topic of obtaining a mortgage after late payments. We’ll explore the impact of late payments on your credit score, how lenders perceive them, and practical strategies you can employ to improve your mortgage prospects. Our aim is to empower you with the knowledge and tools to confidently approach the mortgage application process, even if your financial past isn’t perfect.

Can I get a mortgage after making late payments?

Yes, you can still potentially get a mortgage even if you’ve had late payments in the past. However, it can be more challenging as lenders often see late payments as a sign of financial instability, which may increase their perceived risk of lending to you.
There are a few factors that will impact your ability to secure a mortgage after late payments:

The severity of the late payments: Late payments can range from being a few days late to being several months late. The more severe the late payment, the more negatively it can impact your chances of securing a mortgage.

The frequency of late payments: If you’ve had just one or two late payments years ago, lenders may overlook these instances. But if you’ve had multiple late payments or they are a consistent problem, it may pose a significant issue.

Recentness of the late payments: If the late payments are recent, they could have a more significant impact on your mortgage application. Older late payments, especially those that you’ve since rectified, will carry less weight.

The lender’s policies: Different lenders have different risk appetites. Some may be more willing to work with applicants with a history of late payments, especially if they can demonstrate that they’ve since improved their financial habits.

If you have a history of late payments, it’s essential to work on improving your credit score before applying for a mortgage. You can do this by paying all bills on time, reducing your overall level of debt, and not applying for new credit in the months leading up to your mortgage application.

In the UK, some specialist lenders offer what are known as ‘bad credit mortgages’ or ‘subprime mortgages’. These are designed for people with less-than-perfect credit histories, but they often come with higher interest rates to reflect the increased risk to the lender.

How can late payments affect my eligibility for a mortgage?

Late payments can affect your eligibility for a mortgage in several ways, primarily by influencing your credit score and the perceived risk you present to lenders. Here’s how:

Credit Score: Late payments are typically reported to the credit bureaus and can lower your credit score. A lower credit score can make it harder for you to get approved for a mortgage, as lenders often use credit scores to help determine your creditworthiness.

Interest Rates: If you’re approved for a mortgage with a history of late payments, you may be offered a higher interest rate than someone with a flawless payment history. This is because lenders typically charge higher rates to borrowers they perceive as riskier.

Loan Terms: In addition to possibly having a higher interest rate, you may also be offered less favourable loan terms. For example, you might be required to make a larger down payment, or you may have to pay additional fees.

Loan Approval: In some cases, a history of late payments could lead to your mortgage application being denied altogether. This is more likely if the late payments are recent, frequent, or severe (i.e., you were significantly overdue).

Mortgage Type: Your options for mortgage types may also be limited. Some mortgage schemes, like those offered by government entities, have strict guidelines and may not be available to those with a history of late payments.

How long after late payments can I apply for a mortgage?

The impact of late payments on your ability to apply for a mortgage can depend on several factors, including the severity and frequency of the late payments, and the specific policies of the mortgage lender. Here are some general guidelines:

Minor Late Payments: If you’ve been late by 30 days on a few occasions, most lenders will not view this as a significant issue, especially if these occurred a few years ago.

Major Late Payments: If you’ve been 60 or 90 days late, this could be seen as more serious. Some lenders may require a certain period of time to pass before considering your application — often a year or two of good credit behaviour after the late payment incident.

Defaulted loans, bankruptcies, and foreclosures: For more serious credit issues, such as defaulted loans, bankruptcies, or foreclosures, lenders typically require a longer waiting period. This could range from 2 to 7 years, depending on the nature of the issue and the type of mortgage loan.

Remember, the impact of late payments decreases over time, especially if they are isolated incidents and you’ve demonstrated responsible credit use since then. Good credit behaviour, such as making all your payments on time, not maxing out your credit cards, and not applying for unnecessary additional credit, can help to improve your credit score over time.

It’s also worth noting that different lenders may have different requirements. So, it’s possible that one lender may reject your application due to late payments, while another might accept it.

What impact do late payments have on my mortgage interest rates?

Late payments can indeed affect the interest rates offered on a mortgage. Here’s how:

Credit Score Impact: Late payments typically lower your credit score. A lower credit score can lead to higher interest rates because lenders see you as a higher risk borrower. They may charge a higher rate to compensate for the increased risk of default.

Risk Assessment: Lenders not only look at credit scores but also at the entire credit report, including your payment history. A history of late payments may signal financial instability, causing lenders to increase the interest rate to balance the risk.

Loan Terms: The terms of the loan offered to you might be affected. If the lender perceives you as a higher risk due to your late payment history, you might be required to make a larger down payment, or pay higher fees, in addition to a higher interest rate.

Loan Approval: In some cases, the impact could be even more significant. If late payments are a regular occurrence, it could lead to your mortgage application being rejected outright.

Keep in mind that while late payments can have a negative impact, the exact amount your interest rate would increase depends on various factors, including how recent and frequent the late payments were, the lending institution’s policies, the type of mortgage you’re applying for, and the overall state of the economy and mortgage market.

The good news is that late payments have less of an impact over time, especially if there is a sustained period of on-time payments after them. It’s always a good idea to work on improving your credit score and financial health before applying for a mortgage to ensure you receive the best possible interest rates. Consulting with a mortgage broker or financial advisor can provide valuable insight into your individual situation.

How many late payments must I make before my mortgage application is affected?

The exact number of late payments that might affect your mortgage application can vary based on a few factors, such as the severity of the late payments (how late they were), their frequency, and their recency. Here’s a general guideline:

One or Two Late Payments: If you have one or two late payments that were less than 30 days late and were not recent, they might not significantly impact your mortgage application. Lenders generally understand that people can occasionally miss a payment due to unforeseen circumstances.

Multiple Late Payments: However, if you have several late payments, especially if they were recent or were 60 or 90 days late, it could seriously impact your mortgage application. This is because it suggests to lenders a pattern of financial irresponsibility or instability.

Late Mortgage Payments: Lenders take late payments on a current or previous mortgage very seriously. Even one late payment on a mortgage could potentially affect your ability to get a new mortgage.

Ultimately, lenders are looking at your overall creditworthiness, reliability, and ability to repay the loan. A pattern of late payments suggests that you may not be a reliable borrower, which increases their risk.

Remember, the impact of late payments on a mortgage application decreases over time, particularly if you’ve demonstrated responsible financial behaviour since the late payments occurred. If you’ve had late payments in the past, it’s a good idea to work on improving your credit score and overall financial health before applying for a mortgage.

Are there any mortgage lenders who accept borrowers with a history of late payments?

Yes, there are mortgage lenders who may still consider borrowers with a history of late payments. It’s important to note that while there are lenders who may consider borrowers with a history of late payments, the terms of the mortgage may not be as favourable. For example, you may be charged a higher interest rate or need a larger deposit.

There are also specialist lenders in the UK who cater to those with less-than-perfect credit histories. These are often referred to as ‘bad credit’ or ‘subprime’ mortgages. However, these typically come with higher interest rates to reflect the increased risk to the lender.

Can late payments on a previous mortgage prevent me from getting a new mortgage?

Late payments on a previous mortgage can make it more challenging to secure a new mortgage, but it does not necessarily prevent you from getting one. Mortgage lenders consider a variety of factors when evaluating your application, and payment history on previous mortgages is certainly an important component of that evaluation. Here’s how late payments could affect your application:

That said, having a history of late payments doesn’t automatically disqualify you from getting a new mortgage. Various lenders have different criteria, and some are willing to work with borrowers who have less-than-perfect credit histories. There are also specialist lenders who provide ‘bad credit’ or ‘subprime’ mortgages, though these often come with higher interest rates and may require a larger down payment.

To improve your chances, it’s recommended to demonstrate a period of responsible financial behaviour before applying for a new mortgage. This could include making all current payments on time, reducing outstanding debts, and not applying for new credit. It can also be beneficial to speak with a mortgage broker or financial advisor to understand the best options for your individual circumstances.

Are there any specific mortgage products?

Yes, there are specific mortgage products designed for those with a history of late payments or other credit issues. These are often referred to as “bad credit mortgages” or “subprime mortgages”.

While these products do exist, it’s important to be aware that they often come with higher interest rates and could require larger down payments. This is because lenders view borrowers with poor credit histories as higher risk, and they price their products accordingly to manage this risk.

What is the typical waiting period after late payments to apply for a mortgage? 

The waiting period after late payments to apply for a mortgage can vary greatly depending on the severity, frequency, and recency of the late payments. Here are some general guidelines:

30-Day Late Payments: If you have a few instances of being 30 days late, most lenders might not view this as a significant issue, especially if they occurred a few years ago.

60-90 Day Late Payments: If you have been 60 or 90 days late, this could be seen as more serious. Many lenders may require a “waiting period” of a year or two of good credit behaviour after the late payment incident.

Serious Delinquencies (Default, Bankruptcy, Repossession): For more severe credit issues, such as defaulted loans, bankruptcies, or Repossession, lenders typically require a longer “waiting period” or “seasoning period”. This can range from 2 to 7 years, depending on the nature of the issue and the specific policies of the mortgage lender.

It’s important to note that these are general guidelines, and policies can vary greatly from one lender to another. Some lenders might be more lenient, while others might be stricter.

Additionally, even after the waiting period, late payments can still affect your mortgage application, particularly if they result in a significant drop in your credit score. Therefore, it’s essential to focus on rebuilding your credit during the waiting period by making on-time payments, reducing your debt, and demonstrating responsible credit use.

Is there a grace period for late payments before they affect my mortgage application? 

When it comes to making payments on credit accounts, such as loans or credit cards, most lenders provide a grace period — typically around 15 days — during which a late payment won’t be reported to the credit bureaus. However, you may still incur a late fee from your lender.

If you exceed the grace period, the lender can report the late payment to the credit bureaus, which could then affect your credit score. Typically, a payment isn’t reported as late until it’s 30 days overdue. This means, for example, that if your payment is due on the 1st of the month, it would not be reported to the credit bureaus as late until the 2nd of the following month.

Once a late payment is reported, it can stay on your credit report for up to seven years. The impact on your credit score can vary depending on several factors, including how late the payment was, how recently it occurred, and how frequently you’ve been late with payments. A single, recent late payment can significantly impact your score, particularly if you previously had a spotless credit history.

When it comes to mortgage applications, any late payments appearing on your credit report could be a concern for potential lenders. It’s also important to remember that even if a late payment isn’t reported to the credit bureaus, a lender may still charge late fees, which could violate the terms of your loan agreement.

What are the potential consequences of late payments on my existing mortgage? 

Late payments on your existing mortgage can have several consequences, some of which can have long-term effects. Here are some potential consequences you could face:

Late Fees: If you don’t make your payment by the due date or within the grace period, which is typically about 15 days, your mortgage lender will probably assess a late fee.

Damage to Credit Score: If your payment is more than 30 days late, the lender will typically report this to the credit bureaus. This late payment record can remain on your credit report for up to seven years and can significantly lower your credit score, which could make it harder to obtain credit in the future.

Increased Interest: Some mortgage contracts include a penalty interest rate that can be applied if you make late payments. This means the interest rate on your mortgage could increase if you are consistently late with your payments.

Repossession: If you continue to miss payments, your lender could eventually initiate repossession to recover the money they loaned you. The exact number of missed payments that can lead to foreclosure can vary, but it’s generally after around 3-6 months of missed payments.

Difficulty Refinancing: If you have a history of late payments on your existing mortgage, it may make it more difficult to refinance your mortgage later on. Lenders look at your payment history when deciding whether to approve a refinance.

To avoid these consequences, it’s important to make your mortgage payments on time. If you’re struggling with your mortgage payments, it’s a good idea to reach out to your lender. They may be able to work with you to modify your loan terms, provide forbearance, or offer other solutions to help you avoid missing payments.

What should I do if I’ve had a late payment?

If you’ve had a late payment, here are some steps you can take:

Pay As Soon As Possible: If you realise you’ve missed a payment, make it as soon as possible. The longer the payment is overdue, the more serious the consequences can be.

Contact Your Lender: Get in touch with your lender immediately. Explain the situation and see if they can help. They might be able to waive the late fee, especially if it’s your first time being late and you usually pay on time. They may also have advice or solutions for avoiding future late payments.

Set Up Automatic Payments: If you forgot to make the payment, consider setting up automatic payments to avoid missing future ones. Just make sure there’s enough money in your account to cover the payment each month.

Review Your Budget: If you’re struggling to make payments because of financial difficulties, review your budget and see where you can cut back. It might be helpful to seek advice from a financial counsellor or advisor.

Check Your Credit Report: If your payment was more than 30 days late, check your credit report to see if the late payment was reported. If it was, you may see a dip in your credit score.

Improve Your Credit: Start focusing on improving your credit. This can involve making all future payments on time, reducing your debt, and not applying for new credit unless necessary.

Seek Financial Advice: If you’re consistently struggling to make payments, it could be beneficial to seek advice from a financial advisor. They can provide strategies and guidance based on your specific circumstances.

Remember, a single late payment might not significantly impact your credit health if your overall credit history is good. However, consistently missing payments can lead to more serious consequences, including damage to your credit score and potential legal action from your lender. Always strive to make payments on time and communicate with your lender if you’re facing difficulties.

What is considered a late mortgage payment?

A mortgage payment in the UK is typically considered late if it’s not made by the due date as set out in your mortgage agreement. However, many lenders offer a grace period – often around 14 days – during which you can make the payment without being charged a late fee or having it marked as a missed payment.

If you miss your payment beyond this grace period, you’ll usually be charged a late payment fee as stated in your mortgage agreement. The amount of this fee can vary depending on the terms of your mortgage.

More importantly, if your payment is more than one month late, your lender will likely report this to the credit reference agencies (Experian, Equifax, and TransUnion). This late payment record can stay on your credit file for six years, and it can reduce your credit score.

If your payment is late by two months or more, it will further negatively impact your credit score, and lenders will view this as more severe. Persistently late payments or payments that are three months or more overdue can lead to your mortgage lender starting repossession proceedings, although this is generally a last resort.

If you anticipate that you’re going to be late with a mortgage payment, it’s best to contact your lender as soon as possible. They may be able to offer assistance or come to an arrangement, such as a payment holiday or temporary reduction in payments, to help you manage your situation better. They’d rather work with you to receive payment than have to start proceedings to repossess your home.

How does this differ from arrears?

In the context of mortgages, both late payments and arrears refer to overdue mortgage payments, but they are typically used in slightly different contexts.

A late payment refers to a mortgage payment that has not been made by the due date specified in the mortgage agreement. As mentioned previously, this can result in late fees and negative marks on your credit file if the payment is more than one month overdue.

On the other hand, arrears refer to the accumulated amount that is overdue after missing one or more mortgage payments. When you are ‘in arrears’, it generally means you have missed several payments, not just one, and you owe your lender the total of all these missed payments.

Arrears are a more serious situation. While one late payment may have a limited impact on your overall mortgage, being in arrears can trigger more severe consequences. If you’re in arrears, your lender will likely attempt to make arrangements with you to pay off the overdue amount. If these attempts fail and the arrears continue to accumulate, the lender may start proceedings to repossess your home.

In both cases, communication with your lender is key. If you’re struggling to make your payments, reach out to your lender as soon as possible. They may be able to provide options to help manage your situation, avoid going into arrears, or mitigate the situation if you are already in arrears.

How do late payments affect your credit?

Late payments can have a significant impact on your credit in several ways:

Credit Score: Late payments can cause your credit score to drop. The impact is greater if the payment is more overdue, for instance, a payment that’s 90 days late will have a more severe effect than one that’s 30 days late.

Payment History: Payment history is a major factor in calculating your credit score. In the UK, it makes up around 35% of your total score. Late payments can remain on your credit file for six years from the date of the missed payment.

Future Credit Applications: Lenders consider your credit report and credit score when deciding whether to lend to you. Late payments on your credit report could make lenders see you as a riskier borrower, leading to denied credit applications or higher interest rates.

Severity and Frequency: The impact of a late payment on your credit score can depend on how severe it is (how late the payment was) and how frequently you pay late. A single late payment may not drastically hurt your score, especially if it’s an isolated incident. However, multiple late payments can significantly lower your score.

Recency: The more recent the late payment, the greater its impact on your credit score. As time passes, its impact on your credit score should lessen, provided you stay current with all your payments going forward.

Therefore, it’s essential to make all payments on time to maintain a healthy credit score. If you’re having trouble making payments, it’s best to contact your lender or a financial advisor for assistance.

Should I check my credit report?

Yes, it’s definitely a good idea to regularly check your credit report. Here are some reasons why:

Monitor Your Credit Status: Regularly checking your credit report helps you understand your current credit status. It shows your credit history, including loans, credit cards, and other forms of credit you have taken out, as well as your payment history.

Identify Errors: Sometimes, your credit report may contain errors, such as incorrect personal details or a credit product you didn’t apply for. These errors can negatively impact your credit score, so it’s essential to identify them and contact the credit reference agency to get them corrected.

Detect Fraud: If someone fraudulently applies for credit in your name, it will show up on your credit report. Early detection can prevent further damage to your credit status and personal finances.

Plan for Credit Applications: If you’re planning to apply for credit (such as a mortgage, loan, or credit card), checking your report can give you an idea of your likelihood of approval. If your credit score is low or your report shows negative factors, you may want to take steps to improve your credit before applying.

Understand Impact of Financial Decisions: Your credit report can help you understand how your financial decisions, such as late payments or high credit card balances, are affecting your credit score. This can guide you in making decisions that will help improve your credit status.

In the UK, you have the right to access your statutory credit report free of charge from each of the three main credit reference agencies: Experian, Equifax, and TransUnion. Additionally, you can use services like ClearScore (Equifax), Credit Karma (TransUnion), and Experian’s free service to check your credit score and report regularly. Remember, different lenders can use different agencies, so it’s worth checking your report with all three.

What might I find on my credit file?

Your credit file, also known as a credit report, contains a wealth of information about your financial history. Here’s what you might find when you review it:

Personal Information: This includes your full name, date of birth, current and previous addresses, and potentially your employment history.

Credit Accounts: This section lists all your current and past credit accounts, including bank and credit card accounts, loans, mortgages, and possibly your utility and mobile phone contracts. For each account, it will show the type of credit, the date it was opened, the credit limit or loan amount, the current balance, and payment history.

Payment History: This shows whether you’ve made your credit account payments on time and in full. Late or missed payments, defaults, and other negative marks can stay on your report for six years.

Public Records: This can include county court judgments (CCJs), bankruptcies, individual voluntary arrangements (IVAs), and other legal proceedings related to debt. These also typically stay on your report for six years.

Credit Inquiries: Whenever you apply for credit, the lender performs a “hard” credit check that leaves a footprint on your report. These inquiries remain on your report for 12 months and may affect your credit score if you have too many in a short period of time.

Financial Associations: This includes anyone you’ve had a joint financial agreement with, such as a joint mortgage or bank account.

Fraud Warnings: If you’ve been a victim of fraud or if a fraud attempt has been made using your personal details, this may be flagged in your credit file.

Reviewing your credit file regularly is an essential part of managing your financial health. It allows you to correct errors, notice signs of fraud, and understand how your financial behaviour impacts your creditworthiness. In the UK, you can request your statutory credit report for free from the three main credit reference agencies: Experian, Equifax, and TransUnion.

What to do if you’ve been denied a mortgage due to late payments

If you’ve been declined for a mortgage or other form of credit due to late payments, here are some steps you can take to improve your situation:

Understand the Reason: The first step is to understand why you were declined. If it was due to late payments, try to identify whether it was one late payment or a pattern of late payments that led to the decline.

Check Your Credit Report: Request a copy of your credit report to check for any errors or discrepancies. If you find any, contact the credit reference agency to get them corrected.

Create a Budget: If late payments are due to financial struggles, it may be time to create a strict budget. Ensure you’re not spending more than you’re earning and prioritise paying off your existing debts.

Set Up Direct Debits: Setting up automatic payments can ensure that your bills are paid on time and you don’t incur any further late payments.

Pay Down Debts: Where possible, pay off any outstanding debts you have. This not only improves your credit utilisation ratio but also your overall creditworthiness.

Rebuild Your Credit: Make all your other payments on time, keep your credit utilisation low, and don’t apply for new credit unless necessary. This can help you rebuild your credit over time.

Get Professional Advice: Consider seeking advice from a credit counsellor or a financial adviser. They can provide guidance and suggest strategies to manage your debts and improve your credit.

Speak to a Mortgage Broker: A mortgage broker can help you understand your options and may know of lenders who are willing to consider applicants with a history of late payments.

Remember, improving your creditworthiness won’t happen overnight, but taking these steps can put you on the right path. Once you’ve made progress, you may have a better chance of being approved for a mortgage or other type of credit.

Does the type of late payment I have matter?

Yes, the type of late payment can indeed have a significant impact on how lenders perceive your creditworthiness.

Mortgage or Rent Payments: Late payments on a mortgage or rent are taken very seriously by lenders. Since these payments typically represent an individual’s most significant financial commitment, any delay or default could indicate severe financial difficulties and make lenders cautious.

Secured Loans: Late payments on secured loans like a car loan are also of great concern to lenders. Secured loans are usually high-priority payments because the asset (like a car or a house) can be repossessed if you default.

Utility Bills: While these don’t carry as much weight as the previously mentioned payments, persistent late payments for utilities can still signal to potential lenders that you struggle with managing your finances effectively.

Credit Cards and Unsecured Loans: Late payments on credit cards and other unsecured loans are also important. Lenders pay close attention to your payment habits on revolving accounts like these because they can provide insight into how you manage and pay off debt over time.

Student Loans: Although these are usually considered low-risk loans, chronic late payments or defaults on student loans can affect your creditworthiness.

Overdrafts: Continually being in an unauthorised overdraft or exceeding your agreed limit can negatively impact your creditworthiness.

Each late payment may not only reduce your credit score but also decrease your attractiveness to future lenders. Therefore, it’s critical to aim to make all payments on time and in full. If you’re struggling, contact your lender as soon as possible to discuss your situation and explore potential solutions.

Remortgaging with late payments

Remortgaging with late payments can be more challenging than if you have a clean credit history, but it is not impossible. Here are some steps to consider:

Understand Your Credit Report: First, get a copy of your credit report to understand the extent of the late payments and their impact on your credit score. This can help you explain your situation to potential lenders.

Communicate with Your Current Lender: If you’ve had a good relationship with your current lender aside from the late payments, they might be willing to remortgage your loan. They already have a history with you, and this might work in your favour.

Improve Your Credit: If possible, take steps to improve your credit before applying for a remortgage. This might involve paying all bills on time, reducing your debt levels, and not applying for new credit.

Save a Larger Deposit: If you can save a larger deposit, this reduces the loan-to-value (LTV) ratio, which can make lenders more likely to offer you a remortgage despite the late payments.

Speak to a Mortgage Broker: A mortgage broker can help navigate the remortgaging process, particularly if you have late payments on your credit report. They have access to various lenders and can advise you on which ones are more likely to accept your application despite your credit history.

Consider Specialist Lenders: Some lenders specialise in offering mortgages to people with less-than-perfect credit histories. While the interest rates may be higher, this could be an option if you’re unable to remortgage with a mainstream lender.

What should I do if I receive a late payment letter?

Receiving a late payment letter can be stressful, but it’s important to act quickly and responsibly. Here’s what you should do:

Don’t Ignore the Letter: Ignoring the letter will not make the problem disappear. In fact, it could make the situation worse, leading to more fees, harm to your credit score, or even legal action.

Review the Letter Carefully: Make sure the information in the letter is accurate. Check the amount due, the date of the missed payment, and the account details. If you find any inaccuracies, contact the lender immediately to clarify.

Check Your Own Records: Review your bank statements or payment records to confirm whether you did indeed miss a payment.

Contact the Lender: If you missed the payment, contact your lender as soon as possible. Explain your situation and discuss possible solutions. They may be able to set up a payment plan, extend your payment due date, or even waive any late fees.

Make the Missed Payment: If you’re able to, make the missed payment as soon as possible to limit any further damage to your credit score. If you can’t pay the full amount, discuss this with your lender. They may be able to work with you to develop a manageable payment plan.

Set Up Automatic Payments: To avoid future late payments, consider setting up automatic payments. This ensures that your payments are made in full and on time each month.

Seek Financial Advice: If you’re struggling with your finances, consider speaking to a financial advisor or a debt counsellor. They can help you understand your options and guide you on how to manage your debts.

Remember, the key is to address the issue promptly and honestly, both with the lender and yourself. It’s also crucial to understand why the payment was late to prevent it from happening again in the future.

How far back do lenders look for late payments?

When evaluating your creditworthiness for a mortgage, lenders typically look at your credit history for the past six years. This is because information such as late payments, defaults, county court judgments (CCJs), and other negative marks generally stay on your credit report for six years from the date they occurred.

It’s important to note that while late payments from five or six years ago still appear on your report, lenders might not consider them as seriously as more recent ones. Recency, frequency, and severity of late payments all matter. Recent late payments can be more concerning to lenders because they may indicate ongoing financial difficulties.

Lenders will also consider many other factors, including your current income, employment status, overall debt levels, and how much you want to borrow. Each lender has their own criteria, so even with a history of late payments, you might still be eligible for a mortgage with certain lenders.

If you’re concerned about late payments affecting your ability to secure a mortgage, you might want to consult a mortgage broker or financial adviser. They can provide advice tailored to your individual circumstances and may know of lenders who are more forgiving of past credit issues.

How much deposit will I need?

The deposit required for a mortgage can vary widely based on a number of factors, including the lender’s policies, your credit history, the type of property you’re buying, and the loan-to-value (LTV) ratio the lender is willing to offer.

In the UK, the minimum deposit for a mortgage is typically around 5% to 10% of the property’s value. However, if you have a history of late payments or other negative marks on your credit report, lenders might require a larger deposit to offset the risk.

As a general rule, the larger the deposit you can provide, the lower the LTV ratio, and the more likely you are to be offered a mortgage – even with a less-than-perfect credit history. A larger deposit can also result in a lower interest rate and cheaper monthly repayments.

In terms of specific numbers, you’ll need to speak directly with potential lenders or a mortgage broker to understand exactly how much deposit you’ll need. They can take into account your specific circumstances and the current lending environment to provide a more accurate estimate.

Remember, you’ll also need to budget for other costs associated with buying a home, such as stamp duty, valuation fees, legal costs, and moving expenses.

How late can you pay your mortgage?

The specific timeframe within which you must pay your mortgage will depend on the terms and conditions of your mortgage agreement. Typically, a mortgage payment is considered late if it isn’t received by the lender by the due date or within a grace period specified in your agreement. This grace period is typically around 15 days.

If you fail to make the payment within this grace period, the lender can charge a late payment fee, and the missed payment can be reported to credit bureaus, potentially impacting your credit score.

Therefore, it’s important to ensure your mortgage payments are made on time. If you’re experiencing financial difficulties that are making it hard to meet your mortgage payments, contact your lender as soon as possible. They may be able to arrange a new payment plan, modify the loan terms, or provide other solutions to help you avoid foreclosure. It’s always better to reach out to your lender sooner rather than later when you’re facing payment difficulties.

I need a mortgage after late payments, what should I do?

Getting a mortgage after having late payments on your credit history can be challenging, but it is not impossible. Here are steps you can take to increase your chances:

Check Your Credit Report: This will help you understand your credit score and identify any issues, such as late payments, that might be affecting it. Knowing what is on your credit report can help you explain any negative points to a potential lender.

Improve Your Credit Score: If possible, take steps to improve your credit score before applying for a mortgage. This might involve paying all bills on time, reducing the amount of debt you have, and not applying for new credit. It’s also essential to ensure that the late payments on your credit report are not due to errors. If they are, dispute them with the credit bureau.

Save a Larger Deposit: If you are able to save a larger deposit, this could help reduce the risk that lenders perceive as a result of your late payments. The larger the deposit, the smaller the loan you need, reducing the lender’s risk.

Document Your Financial Stability: This could include showing steady employment, a strong income, and/or a low debt-to-income ratio. If you can prove that you are financially stable now, lenders may be more willing to overlook past late payments.

Get a Mortgage Broker: A mortgage broker has relationships with multiple lenders and can advise you on which ones are most likely to approve you despite your late payments. They can also guide you through the application process.

Consider Specialist Lenders: Some lenders specialise in offering mortgages to people with less-than-perfect credit histories. While the interest rates may be higher, this could be an option if you’re unable to get a mortgage from mainstream lenders.

Write a Letter of Explanation: A well-written letter explaining the circumstances that led to the late payments might help. If the late payments were due to a temporary setback, such as job loss or a medical emergency, and you’ve since improved your financial situation, lenders might take this into consideration.

Remember, everyone’s financial situation is different. These are general tips and may not apply in every situation. For advice tailored to your circumstances, consider speaking to a financial advisor or mortgage broker.