So many of us long to own our own property, and this means being able to secure a mortgage so you can officially become a homeowner.
However, the world of mortgage loans is a complicated and overwhelming process at times. A lot of people worry about the state of their personal finances, and how much this is likely to impact the process of applying for a mortgage. There are a lot of things to keep in mind when it comes to securing a mortgage, and it is important to know how your financial history can impact this.
Your credit report is hugely important when it comes to making the most of this and trying to find the right mortgage for your future.
Now, trying to secure a mortgage after a late payment or payments on your credit report can be a scary prospect for a lot of people. A lot of people will miss odd payments at some point in their lives, but so much emphasis is placed on the negative aspects of this that it can seem like an uphill struggle. In fact, it’s not as much of an issue as you might think, and a mortgage after a late payment is still a pretty common occurrence.
However, it is a fact that some lenders will reject an applicant based solely on one missed payment, even if it may just have been a simple error. This can be upsetting and frustrating, and the appeals process can make things worse in this regard.
However there are plenty of lenders out there who will still consider those who might have missed payments. No matter how bad your financial decision, there are still options open to you, and you should check out our expert guidance you can use to help you with this process.
Late Payments vs Arrears
So, you might be wondering what the difference is between late payments and arrears, and whether they are the same thing. You need to understand that these are two separate circumstances that should not be treated the same. Arrears are where payments fall behind consecutively, and these are usually cause for concern.
However, a late payment is usually just a single instance of a payment being late for a particular reason. A late payment is something that generally will not be registered as a missed payment, so this is important as it is not going to go on your record and your file.
Check Your Credit Report Regularly
Your credit score is one of the most important elements in this equation, and it is important that you know the state of the score, as well as how it is likely to affect you and your mortgage. Ignore the myths about the issues with searching for your credit score – this is something that is essential, and you need to make sure you work on it as much as possible.
By knowing your credit score you can work toward improving it and trying to get the best score you possibly can. Credit reports are what lenders look at when it comes to assessing your mortgage application, so it is definitely worth getting your own look at it so that you can address any errors that may be bringing down your credit rating.
Some Late Payments Do Matter
However, you also need to understand that there are some late payments that do actually matter here, with two in particular – unsecured late payments, which includes things like credit cards, phone bills, personal loans, etc, and secured late payments, which include things like mortgages.
These can be problematic for you, because these are important to lenders, as they show how good you are at organising your finances and taking charge of money. There are a lot of things that you need to keep in mind here, and you should do all you can to avoid these kinds of late payments.
They can result in a rejection of your application altogether, and, in best case scenarios, if you are accepted, you will most likely have to pay a much higher rate for your mortgage than you otherwise would.
How Many Missed Payments Have You Had?
While one (possibly two) missed payments is not exactly the worst thing in the world, it is also true that you can’t afford to be having too many of these. Any more than one or two would suggest a pattern of poor financial organisation, and this is going to make it much more difficult for you to be given a mortgage that you want.
However, even those with quite a few instances of recent missed payments may still be able to find a specialist lender who will agree to give them a mortgage. However, it would be a good idea to make sure this isn’t an issue for you, and that you don’t have late payments to worry about.
When Was the Most Recent One?
You also need to think about when your most recent payment was, and how this might impact on your mortgage payments at a later date.
If you had a late payment a few years back, this is unlikely to be a huge problem, however, if you have had a recent history of many late payments, this is something that is likely to cause more issues, and would be a cause for concern for most lenders. Most lenders want you to have a clean file for at least a year, so this is definitely something you can work towards fixing and helping you to get the best possible outcome for your mortgage deal.
When you are applying for a mortgage of any sort, one of the key things you are going to need to get right is the deposit. This is essential for any lender, and the amount of deposit you can offer can go a long way towards impacting the type of mortgage you can get.
The higher the deposit amount, the better, and this is because the lender is taking on less risk. However, don’t make the mistake of thinking that you have to have a big deposit in order to get this. Even with a small deposit amount, and a recently late payment, you should still be able to find a lender who is willing to offer you a mortgage.
Bad credit is definitely something that affects a lot of people, and it’s very easy to fall foul of this if you aren’t managing your money effectively enough. Bad credit issues can play havoc with a mortgage application, and could well restrict the lenders you have access to these days.
Sure, there are the late payments, but there might be other kinds of bad credit issues that you need to look out for as well. Things like CCJs, IVAs, bankruptcy, etc can be very damaging for your credit rating and these are things you need to try to avoid where possible. These are things that lenders will be less forgiving about, so it is vital that you try to clean up your credit rating and work toward getting out of bad credit as much as you can.
Still Need Advice?
We appreciate that this can be a confusing and scary time for a lot of people, and there are so many things you need to factor in when it comes to improving the chances of getting a good mortgage offer. One of the key ones is, of course, working on keeping a strong credit rating.
If you still need advice and there is anything you are unsure of, you should make sure you get in touch with us. We have a friendly and experienced team of mortgage advisers on hand to help deal with any questions or queries you might have, and this is something that can really help. Getting sound advice is essential for peace of mind, as well as allowing you to understand the options that are available to you, and how this will affect and impact things
One of the biggest things you need to do is make sure you don’t panic. When it comes to money and finances, you are going to need to make sure you keep level-headed about things, and this is going to help you make better decisions.
No matter how bad the situation is, it is probably not as bad as you think it is. Make sure you try to be calm and collected, and get plenty of advice and support before you make your decisions, and this is going to help you in a lot of ways.
These are some of the key things you are going to need to focus on as much as possible, and it is important to ensure you do what it takes to look into your credit rating as much as possible.
There are a lot of things that play a role when you are trying to get the best mortgage loan, and this will depend a great deal on your financial situation. Make sure you think about all the things you can do to work on trying to improve this, and it is something that could well have a major impact on your future.