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Mortgage after Missed Payments

Can I apply for a mortgage after missed payments?

Yes, you can still apply for a mortgage after missed payments, and New Start Financial Services can help. 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?

Most mortgage lenders will look at the income received over the last two or three tax years and average over two years, though some lenders will assess on your latest year. You will have access to an SA 302 which confirms what has been submitted to HM revenue. Your lender may request it alongside your accounts or on it’s own.

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 most suitable 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 right, most suitable 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.

Stuart Dibley 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.