Getting a mortgage with late payments
Late payments can leave marks on your credit file, which will raise red flags with mortgage companies who, understandably, will have concerns about your ability to keep up with your monthly mortgage repayments and ultimately deem you a high-risk borrower.
Some lenders will still consider you for a mortgage even if you have a history of making late payments. They recognise that late or missed payments are not always a solid indication of your ability to manage your money, and it’s our job here at CLS Money to connect you with these companies and help find you the best possible deal.
What should you do if you've made a late payment?
First, don't panic. If you can, balance your account as soon as possible, but if you can't find the money to pay straight away, contact your creditor and let them know your position. They want to resolve the situation as simply for them as possible, so they should work with you to create a new schedule that's comfortable in your current financial position.
However, late payments will leave a mark on your credit report, but only if you don't settle your account in time, and most mortgage lenders will take that very seriously.
Secured and unsecured late payments
There are two types of late payments, each with its own level of severity.
Secured late payments are those that are guaranteed by a property or other asset, for example, a lender will reclaim your house if you fail to meet your mortgage payments.
Unsecured late payments include things like your utility and phone bills, personal loans or your bank overdraft. Lenders rely on you to meet your obligations, and if you fail, their only way to recover their money is to take further action against you.
Missing secured late payments is far more damaging to your credit file, as they're usually associated with far larger amounts and substantial repayments.
Check your credit report
Before applying for any kind of credit—but especially for a large loan or mortgage—you should check your credit score. All banks, building societies, credit or loan companies, and mortgage lenders will examine your credit score to get an idea of how you manage your finances. Late payments, defaults, or court action shows that you've had problems in the past, so most high street lenders will reject your application immediately.
If you can explain specific unavoidable circumstances and that you have everything back under control, plenty of specialist mortgage lenders will happily lend you the money you need. A few late payments don't have to mean the end of your mortgage dream and getting on the property ladder.
CLS – your expert mortgage broker
Because our brokers have comprehensive access to the market, we can put your case to a range of lenders who are happy to consider borrowers with a less-than-perfect credit history. So, if you're worried about missed or late payments, we can help. Once we’ve sourced the right agreement from a lender that’s sympathetic to your situation, we’ll also manage the paperwork and liaise with all third parties to ensure your application is successful.
Contact our experienced brokers today to learn more about arranging a mortgage with a history of late or missed payments.