If you have missed a payment on a credit card, personal loan, overdraft, mobile phone contract or household bill, you may be worried that it will stop you from getting a mortgage.
Your credit history plays an important role when applying for a UK mortgage. However, having a missed payment does not automatically mean that your mortgage application will be declined.
Whether you are:
- Buying your first home
- Moving to another property
- Remortgaging
- Purchasing a buy-to-let property
- Applying with a history of adverse credit
The outcome will depend on the details of the missed payment and your wider financial circumstances.
At BSL Financials, we understand that applying for a mortgage with missed payments can feel complicated. This guide explains how missed payments affect mortgage applications, what lenders may consider and what you can do to improve your chances.
What Happens When You Miss a Payment?
When you miss a payment on a credit agreement or household bill, the provider may record it and report the information to UK credit reference agencies.
The missed payment then becomes part of your credit history.
Depending on how late the payment was and whether the account was brought back up to date, it may appear on your credit report as:
- A late payment
- A missed payment
- Arrears
- A default
- A settled or satisfied default
A payment that is only slightly late may be viewed differently from an account that remained unpaid for several months.
How Long Do Missed Payments Stay on Your Credit Report?
Missed payments and defaults can typically remain on your UK credit report for up to six years.
Their impact may reduce over time, particularly when you:
- Make future payments on time
- Clear outstanding balances
- Avoid further missed payments
- Keep your credit commitments manageable
- Demonstrate stable financial behaviour
An older, isolated missed payment will often be assessed differently from several recent missed payments.
How Do Missed Payments Affect a Mortgage Application?
Mortgage lenders review your credit report to understand how you have managed borrowing and repayments in the past.
Missed payments may cause a lender to consider the application higher risk. Depending on the lender and the circumstances, this could lead to:
- A higher mortgage interest rate
- A requirement for a larger deposit
- A lower maximum borrowing amount
- A more detailed affordability assessment
- Fewer available mortgage products
- The mortgage application being declined
The result will depend on the type, value, frequency and timing of the missed payments.
What Do Mortgage Lenders Consider?
Mortgage lenders do not usually look at one credit score in isolation. They assess the full application.
| Factor | Why It Matters to Mortgage Lenders |
|---|---|
| Number of missed payments | Several missed payments may indicate an ongoing repayment problem. |
| Age of the missed payment | Recent missed payments can have a greater impact than older incidents. |
| Amount involved | A small missed payment may be treated differently from a significant unpaid debt. |
| Type of credit | Missed mortgage or secured-loan payments may be considered more serious than some other commitments. |
| Whether the debt was repaid | A settled or satisfied account may be viewed more positively than an outstanding balance. |
| Reason for the missed payment | An isolated administrative error may be assessed differently from continuing financial difficulty. |
| Deposit available | A larger deposit can reduce the lender’s overall risk. |
| Current affordability | Income, expenditure and existing debts will affect how much you may be able to borrow. |
| Credit behaviour since the incident | Consistent payments after the incident can show improved financial management. |
Will One Missed Payment Stop Me Getting a Mortgage?
Not necessarily.
One missed payment, particularly when it was an isolated incident and has since been resolved, may not automatically prevent you from getting a mortgage.
Lenders may consider:
- How recently the payment was missed
- How much was owed
- Whether the payment has now been made
- Whether other accounts have been maintained correctly
- Whether there is a wider pattern of missed payments
- Your income, deposit and affordability
- The lender’s individual credit criteria
Some lenders may be more flexible than others when assessing mortgage applications with missed payments.
Example: Jane’s Story
Jane missed one credit card payment three months ago after receiving an unexpected medical bill.
Since then, she has:
- Made every payment on time
- Kept her credit card balances below their limits
- Avoided taking out additional borrowing
- Maintained an otherwise healthy credit profile
When Jane applied for a residential mortgage, the lender identified the missed payment. However, it was treated as an isolated incident rather than part of an ongoing pattern.
Her application was assessed alongside her wider circumstances, and she was able to obtain a mortgage at a competitive interest rate.
This example is for illustration only. Mortgage outcomes depend on individual circumstances and lender criteria.
Can I Get a Residential Mortgage With Missed Payments?
It may be possible to get a residential mortgage with missed payments, but lenders can be cautious about recent adverse credit.
Residential mortgage lenders may assess:
- The date of the missed payment
- The type of account involved
- The total amount outstanding
- Whether the account is now up to date
- Your current monthly commitments
- Your income and employment position
- The size of your mortgage deposit
A single older missed payment may have less effect than several recent missed payments across different accounts.
Can I Get a Buy-to-Let Mortgage With Missed Payments?
Missed payments can also affect a buy-to-let mortgage application.
Although buy-to-let lenders often consider the expected rental income from the property, they may still review your personal credit history.
They may look at:
- Your experience as a landlord
- The expected rental income
- The property’s rental coverage
- Your personal income
- Your deposit
- Existing debts
- Missed payments, defaults or arrears
- Your wider credit history
Some specialist buy-to-let mortgage lenders may consider applicants with previous credit issues, although product availability and interest rates may differ.
Do Missed Payments Affect Fixed and Variable Rate Mortgages Differently?
The effect of missed payments is generally connected to the lender’s eligibility criteria rather than whether the mortgage has a fixed or variable interest rate.
However, missed payments may reduce the number of products available to you.
This could affect access to:
- Fixed-rate mortgages
- Variable-rate mortgages
- Tracker mortgages
- Residential mortgage products
- Buy-to-let mortgage products
- Remortgage options
The most suitable mortgage will depend on your circumstances, preferences and the products for which you qualify.
What Is the Difference Between a Missed Payment, Arrears and a Default?
These terms are related, but they do not mean exactly the same thing.
| Credit Issue | General Meaning |
|---|---|
| Late payment | A payment was made after its due date. |
| Missed payment | A required payment was not made during the expected payment period. |
| Arrears | The account has fallen behind by one or more payments. |
| Default | The lender considers the credit agreement to have seriously broken down after continued non-payment. |
| Satisfied default | The defaulted balance has since been repaid. |
| Unsatisfied default | Some or all of the defaulted balance remains unpaid. |
Defaults and continuing arrears are generally considered more serious than a single missed payment.
What If You Have a Default or Mortgage Arrears?
A default may be registered when missed payments continue and the lender takes further action.
This could include:
- Closing the account
- Demanding repayment
- Passing the debt to a collection agency
- Recording a default on your credit file
Defaults and arrears can make getting a mortgage more difficult, particularly when they are recent, unpaid or involve a large balance.
However, a default does not always mean that every mortgage lender will decline the application.
Some lenders specialise in mortgages for applicants with adverse credit, including:
- Missed payments
- Defaults
- County Court Judgments
- Debt management plans
- Previous mortgage arrears
- Other credit difficulties
Eligibility will depend on the lender’s criteria and your individual circumstances.
Example: Mark’s Experience
Mark had unpaid overdraft fees that eventually resulted in a default.
When he first applied for a mortgage, several lenders declined his application.
He then spent the following year:
- Clearing outstanding debts
- Making payments on time
- Avoiding unnecessary credit applications
- Improving his overall credit management
- Saving towards a larger deposit
After demonstrating more consistent credit behaviour, Mark reviewed his position again and found that some lenders offered more flexible buy-to-let mortgage options.
This example is for illustration only. It does not guarantee that another applicant in similar circumstances would receive the same outcome.
How Can You Improve Your Chances After Missed Payments?
Having missed payments does not mean that you should apply to as many lenders as possible.
A more structured approach may help you understand your position and avoid unnecessary mortgage applications.
1. Check Your Credit Reports
Review your credit reports with the main UK credit reference agencies:
- Experian
- Equifax
- TransUnion
Check that your personal information, balances and payment history are accurate.
Look for:
- Payments incorrectly marked as missed
- Accounts that do not belong to you
- Incorrect balances
- Duplicate accounts
- Outdated addresses
- Defaults that should be marked as satisfied
You can contact the credit provider or credit reference agency if information appears incorrect.
2. Keep All Payments Up to Date
Maintain every current payment commitment.
This may include:
- Credit cards
- Personal loans
- Car finance
- Mobile phone contracts
- Utility bills
- Overdrafts
- Existing mortgages
- Other credit agreements
Setting up Direct Debits or payment reminders may help reduce the risk of future missed payments.
3. Reduce Outstanding Debt
Reducing credit card and loan balances may improve your overall mortgage affordability.
Lower debt can help by:
- Reducing monthly financial commitments
- Improving credit utilisation
- Increasing disposable income
- Demonstrating more controlled borrowing
Do not use all your savings to clear debt without considering your required mortgage deposit, fees and emergency fund.
4. Avoid Multiple Mortgage Applications
Multiple mortgage applications within a short period can create several hard searches on your credit report.
This may make it appear that you are urgently seeking credit.
Before submitting a full mortgage application:
- Review your credit history
- Understand your affordability
- Check the lender’s criteria
- Prepare the required documents
- Consider obtaining professional mortgage advice
5. Save for a Larger Deposit
A larger mortgage deposit reduces the loan-to-value ratio.
This may give you access to a wider range of mortgage options because the lender is providing a smaller percentage of the property’s value.
However, deposit requirements will vary between lenders and products.
6. Avoid Taking Out Unnecessary Credit
Taking out new loans, credit cards or finance agreements before a mortgage application may affect affordability.
It may also change the information shown on your credit report.
Where possible, avoid making significant credit changes immediately before applying for a mortgage unless they are necessary.
7. Keep Your Credit Utilisation Manageable
Credit utilisation refers to the proportion of your available revolving credit that you are using.
For example, using most of your available credit card limit may suggest greater reliance on borrowing.
Reducing balances and keeping accounts within their agreed limits may help demonstrate responsible credit management.
8. Register on the Electoral Roll
Being registered on the electoral roll at your current address can help lenders confirm your identity and address history.
Make sure the information on your mortgage application matches the details held by credit reference agencies.
9. Prepare an Explanation
A lender may ask why the missed payment occurred.
Provide a clear and honest explanation where appropriate.
Examples may include:
- An administrative mistake
- A Direct Debit failure
- A temporary loss of income
- Unexpected household costs
- Illness
- A change of address
- A disputed payment
An explanation does not remove the credit history, but it may provide useful context.
10. Consider Specialist Mortgage Lenders
Some mortgage lenders are more experienced in assessing applications involving missed payments and adverse credit.
Specialist lenders may use manual underwriting rather than relying entirely on automated credit scoring.
However, specialist mortgages may involve:
- Higher interest rates
- Larger deposit requirements
- Additional arrangement fees
- More detailed documentation
- Stricter affordability checks
The mortgage should still be assessed for suitability and affordability.
Should You Wait Before Applying for a Mortgage?
Waiting may sometimes improve your options, particularly when the missed payment is recent.
Allowing more time can help you:
- Build a longer record of on-time payments
- Reduce outstanding debt
- Increase your deposit
- Correct credit-report errors
- Improve mortgage affordability
- Demonstrate greater financial stability
However, waiting is not always necessary.
The right approach will depend on:
- The severity of the credit issue
- When it happened
- Whether it has been resolved
- Your deposit
- Your income
- Your current affordability
- The mortgage lenders available
Should You Work With a Mortgage Adviser?
Applying for a mortgage with missed payments can be more complicated because different lenders have different credit criteria.
A mortgage adviser can help you:
- Understand how your credit history may affect your application
- Review your credit report
- Assess your mortgage affordability
- Identify lenders that may consider missed payments
- Avoid applying to unsuitable lenders
- Compare residential and buy-to-let mortgage options
- Prepare supporting documents
- Explain the application process
BSL Financials can review your circumstances and help you understand which mortgage routes may be available.
Documents You May Need
When applying for a mortgage after missed payments, you may be asked to provide:
- Proof of identity
- Proof of address
- Recent bank statements
- Payslips
- Employment details
- Tax calculations and tax year overviews if self-employed
- Business accounts where applicable
- Evidence of your deposit
- Credit-account statements
- Evidence that debts have been repaid
- An explanation of the missed payments
Having the correct documents prepared can make the mortgage application process more straightforward.
Key Takeaways
- Missed payments can affect a mortgage application, but they do not always prevent approval.
- One isolated missed payment may be viewed differently from repeated or recent payment problems.
- Lenders consider the timing, amount, frequency and type of missed payment.
- Defaults and continuing arrears are generally more serious than a single late payment.
- Your income, deposit, debt commitments and overall affordability will also be assessed.
- Improving your payment history and reducing debt may strengthen your position.
- Avoid making multiple mortgage applications without checking lender criteria.
- Specialist mortgage lenders may consider applicants with adverse credit.
- Professional mortgage advice may help you identify suitable options without unnecessary credit searches.
Speak to BSL Financials About Mortgages With Missed Payments
A missed payment does not necessarily mean that your plans to buy a home, remortgage or invest in property must stop.
The important step is to understand what appears on your credit report, how recent the issue is and which mortgage lenders may consider your circumstances.
At BSL Financials, we help UK homebuyers, homeowners and property investors explore mortgage options, including applications involving missed payments, defaults and other credit issues.
Contact BSL Financials for a confidential conversation about your circumstances and the mortgage options that may be available to you.
Disclaimer: This blog is for informational purposes only and does not constitute regulated financial advice. Mortgage availability, interest rates and lender criteria depend on individual circumstances and may change. Please speak with a qualified mortgage adviser before making financial decisions. Your home may be repossessed if you do not keep up repayments on your mortgage. Not all buy-to-let mortgages are regulated by the Financial Conduct Authority.
