How do missed credit card or loan repayments affect your mortgage?

Mortgage lenders offering the cheapest rates are generally not keen to accept applications from borrowers with missed payments, although some lenders are more lenient than others.

A survey of 3,016 UK adults, commissioned by the Money and Pensions Service (MaPS), shows that a third of people (30%) missed at least one payment in 2023. Of those, 14% said it was the first year this had ever happened.

The Money and Pensions Service data shows that credit card repayments were the most common type that went unpaid (11%), followed by utilities (10%), Council Tax or rates (10%) and bank overdrafts or loans (8%). One in 20 had missed a rent (5%) or mortgage payment (4%).

Do the lenders accept mortgage applications from borrowers with missed payments?

Lenders typically do credit checks using multiple credit reference agencies when borrowers apply for a mortgage. They do this to get an overall credit score and the best possible view of an applicant’s financial history.

Some of the biggest lenders like Halifax and Barclays may accept an application if borrowers have missed a payment, providing their overall credit score is good enough. Nationwide for Intermediaries says, any defaults or late payments must generally be satisfied but might be considered if borrowers pass the credit score and they have a reasonable explanation.

Santander does not accept new applicants who have any of the following on their credit file:
- A missed payment on a mortgage in the last 12 months.
- Two or more missed contractual payments on an unsecured loan in the last 12 months or the last six months on any other facility.

Metro Bank for Intermediaries may allow two missed or late payments in the last two years on unsecured lending as long as it's not still showing as outstanding at the point of application. Leeds for Intermediaries says a maximum of one missed mortgage or secured loan payment in the last 12 months. No more than two months arrears on any credit agreement in the previous 24 months. 

Mortgage applications are taken on a case-by-case basis 

Mortgage lenders accept applications on a case-by-case basis, so if you have missed repayments on your credit report and have a good reason, it may be possible to get an application through.

Some smaller or niche lenders are less concerned about mobile phone arrears. For example, one smaller building society states in its acceptance criteria: "The Society has no appetite to lend where applicants have unsatisfied defaults. The Society may consider cases where small defaults on mail order or telecommunications have been satisfied."

Aaron Strutt, product director at Trinity Financial, says: "While some lenders are flexible with accepting applications from borrowers with missed payments, most are not keen on missed mortgage payments. 

"If you have a mortgage, it is important to do everything possible to make repayments because at the end of the fixed or tracker rate, increasingly lenders assess their customers and the rate they offer as part of their product transfer process."  

Would a private bank accept missed payments for a mortgage application? 

There is a good chance private banks will accept applications from wealthier clients with missed payments provided the applicant has a good reason for missing them. CCJs because of parking fines or missed phone payments, may be accepted subject to the overall credit score. Like other lenders, they will probably not like missed mortgage payments.

What happens if you miss several payments and are applying for a mortgage? Are they specialist adverse credit lenders?

There are a range of specialist banks offering adverse credit mortgages like Precise and Pepper Money.

Precise Mortgages will allow a certain amount of adverse credit, with levels being dependent on the product chosen. As a guide, Defaults: 5 in 24 months is the maximum adverse allowed. CCJs: 3 in 24 months. Debt Management Plans (DMPs): Active DMPs and DMPs satisfied less than 36 months accepted. Mortgage arrears: 1 in 12 months or 3 in 36 months.

Precise states: "IVA, Debt relief and bankruptcy must have been discharged for six years. Applicants must not have had any defaults, CCJs or mortgage or secured arrears recorded in the three months before application."

Pepper Money offers rates suitable for customers who haven’t had a Default in the last 48 months and who have never had a CCJ. Ranging rates are available for customers who haven’t had a CCJ or Default in the last six months.

Source: Lender websites and Knowledge Bank

Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation 

The information contained within was correct at the time of publication but is subject to change

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage