Can I apply for a mortgage after missed payments?
Yes, you can still apply for a mortgage after missed payments and New Start Financial helps to arrange these mortgages often. Whilst it is true that some lenders are less strict than others, late (or missed) payments are likely to affect your mortgage application to a certain degree. If you missed a payment on any form of credit (such as personal loan, credit card), the information about it will stay on your credit file for six years regardless of how quickly you have caught up with the payment. You may find that high-street lenders will refuse your mortgage application because missed payments on unsecured loans or credit cards will be flagged as a higher risk. The likelihood is that this will have a negative impact on your credit rating, especially during the first few years.
How difficult will it be to get a mortgage after missed payments?
It all depends on you and your individual circumstances. If you only miss a payment once, you can recover quickly. Credit scores weigh up lots of different pieces of information, not just your late payments. If everything else on your report and application form is favourable, it won’t necessarily be a big problem.
In a nutshell – when you apply for a mortgage, the lender looks at variety of factors including how you have managed your past credit; they make a judgement on how likely you are to keep up with your mortgage payments. In general, the better you have managed your credit commitments, the better your chances of being approved become. Having credit will usually positively affect your credit profile but if you miss any payments it will have the opposite effect. The more missed payments you have had, particularly consecutive payments the more of a potential problem you will have. The same is true of recent missed payments rather than ones longer ago than three months. Missed mortgage payments are of particular concern for mortgage lenders.
Lenders really tightened up their approval criteria following the recession and the crash in 2008. If you have any missed payments on unsecured loans or credit cards, then you will be flagged as a higher risk to the mortgage lender though you can offset this by having a bigger deposit. The larger it is, the less risk to the lender therefore the more likely they are to consider your application.
Though missed payments will stay on your profile for six years it is unlikely that you will have to wait six years to get a mortgage. A good broker will match your profile with the right mortgage options, identifying the best solution for you. Matching your profile to the right solution early is important, as mortgage declines can also have a negative affect on your credit profile and credit score.
Why use a specialized broker?
Sub-prime mortgages are mortgages for borrowers that don’t fit standard criteria and need a little more help in finding the right solution. Prior to 2008 ‘bad credit mortgages’ were supplied by specialist lenders and less severe problems were very often catered for by High Street Lenders. Following the credit crunch specialist lenders almost disappeared from the market and High Street Lenders appetite for risk disappeared, so for a number of years applicants with special needs really had no options.
Now though whilst the High Street stays firmly in the camp of credit score lending there are a number of specialist or niche lenders who actively want to lend from clients with failed credit score borrowers with minor problem or ‘near prime’ all the way up to more severe problems such as having defaults, CCJ’s, pay day loans, missed payments, debt management schemes and bankruptcies.
A good specialist brokers can help you find the best solution for you based on your circumstances – if your credit score is damaged they can help find you a lender who is right for you even though you have probably been declined by a high street lender. A good broker will have an in-depth knowledge of the market and they will be able to recommend the most suitable mortgage for you minimising the risk of your application getting rejected.
Specialist Mortgage Adviser
To find out exactly what you're eligible for and at what rates please give me a call on 03456 123835 or fill out a quick enquiry form here.