Do Mortgage Arrears From Two Years Ago Still Block a Remortgage?
- Aug 3
- 15 min read
Find out which lender lookback windows your arrears have already fallen outside, and why a product transfer stays untested.
Quick Answer
Usually not. Secured arrears from around two years ago fall outside several mainstream lenders' stated lookback windows altogether, and sit in the cleanest adverse tier at specialist lenders. They narrow the lender set and can raise the price, but a remortgage is often still available on ordinary criteria.
The widely repeated claim that you must wait six years is wrong. Six years is how long the marker stays on your credit file, and how long one high street lender asks you to declare arrears for. Declaring something is not the same as being declined for it, and several published criteria only look back six, twelve or twenty-four months.
The bigger risk is not a refusal. It is taking your existing lender's product transfer offer without ever testing what anybody else would do, because a transfer needs no affordability assessment and feels like the safe choice. That single decision can keep you priced for arrears that the rest of the market has stopped counting.
Reviewed by Ben Stephenson, FCA authorised (FRN 496907) · 25+ years' experience · 4.9★ on Google. Updated: 31 July 2026.
Who Is This Guide For
Best for homeowners whose mortgage arrears ended two or three years ago, borrowers who never fully cleared arrears before redeeming a loan, and anyone offered a product transfer they have not compared, who assume the arrears rule out anything better.
Key Points
Mainstream arrears windows run 6, 12 or 24 months
A product transfer skips the affordability assessment entirely
Internal transfers were 84% of Q1 2026 refinancing
Table of Contents
Two Years On, Aged Arrears Narrow Your Lender Set Rather Than Close It
Why Your Own Lender Can Re-Price the Loan Without Testing You Again
The Product Transfer Problem Is Not the Rate, It Is That Nobody Checked
Where Secured Arrears From Two to Three Years Ago Actually Sit
Arrears You Never Fully Cleared Before the Mortgage Was Redeemed
The Old Mortgage Is Closed, but Its Payment History Is Not Gone
When Your Current Lender Has No Product Transfer to Offer You
Product Transfers Now Account for Roughly Three Quarters of All Refinancing
Two Years On, Aged Arrears Narrow Your Lender Set Rather Than Close It
Most people asking this have already decided the answer. Two clean years feel like nothing next to three red markers, and much online advice agrees: wait six years.
The published criteria do not support that. Mainstream lookback windows for secured arrears commonly run to six, twelve or twenty-four months. One high street lender allows at most two months' arrears across two years and none in the last six; another, effective July 2026, permits one missed secured payment in twelve.
Arrears from twenty-six months ago fall outside both tests. Not forgiven, not hidden, simply outside the window those lenders have chosen to measure.
What aged arrears do is quieter. They shrink the lender set, they can move you up a price ladder, and they make the path of least resistance a new rate with your current lender.
That last effect is the real subject here. The question is not whether you can remortgage after arrears, but whether you ever find out. If you are unsure any lender can help, start with our overview of mortgages with bad credit.
Why Your Own Lender Can Re-Price the Loan Without Testing You Again
The pull of the product transfer comes down to one rule.
The responsible lending affordability assessment that applies to new mortgage lending is disapplied for a variation of an existing regulated mortgage contract, provided the new or varied contract would not involve the customer taking on additional borrowing beyond the amount currently outstanding, other than fees. That is MCOB 11.6.3R, FCA (2026).
The logic is the whole mechanism. You are not borrowing more than you already owe, so there is no new lending decision, so there is nothing for the rulebook to require an assessment of. Your income is not re-examined. Your arrears are not re-argued.
One building society tells borrowers plainly that a like for like transfer does not require further affordability checks such as supplying proof of income.
Be careful with the version you meet elsewhere. A transfer is often described as involving no credit check at all. What is documented is the absence of a new affordability assessment and of income evidence; published criteria vary on whether any search happens.
It is also conditional. One lender warns intermediaries that changing repayment type, taking a term into retirement, or a material change of circumstances can trigger an affordability check. Since 22 July 2025, though, reducing a term no longer triggers a full assessment on its own, FCA (2025).
The Product Transfer Problem Is Not the Rate, It Is That Nobody Checked
Here is the correction that matters most, and it cuts against nearly everything written about captive borrowers. Product transfer rates are not generally worse than remortgage rates.
In a 2026 consumer comparison across four large lenders and three loan to value bands, the transfer rate beat the same lender's own remortgage rate in eleven of twelve cases, MoneySavingExpert (2026). The explanation given is that after rates rose sharply in 2022, lenders feared new borrowers would fail affordability tests and stepped up efforts to retain existing customers.
So if you have been told loyalty is punished on price, the evidence does not show it. The transfer is not overpriced. It is unexamined.
That distinction is the point. A transfer can only ever be one lender's single price, quoted with nothing to compare it against. Out of every lender in the market, the odds that yours is offering the strongest deal are poor, as the same source puts it.
For a borrower with arrears history the harm compounds. If the arrears pushed you into a specialist product at your last refinance, a transfer keeps you priced inside that book. One specialist guide dated 31 July 2026 showed roughly a percentage point between its cleanest adverse tier and its heaviest, at identical loan to value and term.
A transfer never re-tests whether you have earned your way back down that ladder, or out of that book altogether. A remortgage does, because it is a fresh assessment by a lender with no history with you.
There is a second freeze. Transfers are normally valued by index rather than inspection, and one lender states it uses a national house price index, with revaluation only on request. If your home has risen faster than the index, your loan to value band does not know it. Our guide to product transfer versus remortgage compares the two in full.
What a product transfer settles | What only a remortgage tests |
The rate your existing lender is prepared to offer | Whether any other lender would offer a better one |
That the loan, property and names stay the same | Whether the adverse tier you were placed in still fits |
That no new affordability assessment is required | Whether you now pass a mainstream lender's ordinary criteria |
Your loan to value on an indexed valuation | Your loan to value on a valuation of the actual property |
That the lender who watched the arrears keeps your file | How a lender who only sees your credit file reads it |
Where Secured Arrears From Two to Three Years Ago Actually Sit
Lenders count the worst arrears status reached inside a rolling lookback window, so three in thirty-six months means the account was at worst three payments behind at some point in three years, and a sibling article covers that mechanic in full.
So where does a two year old event land? On one specialist guide, a single missed mortgage payment inside thirty-six months sits in the cleanest adverse tier, with bands up to 95 percent loan to value. Three missed payments lands a tier or two higher, still up to 95 percent, but priced roughly half a percentage point above. That is a price event, not a loan to value event.
Another specialist lender does not count them at all. Its core criteria, updated in June 2026, require no missed secured payments in the last twelve months and a clean status over the last six, so a two year old event is invisible to that test.
Then the six year question, which causes more confusion than anything else here. One major high street lender asks applicants to declare arrears in the last six years on any borrowing, then states that such applications are considered on an individual basis.
A six year disclosure question is not a six year decline rule. You declare it, and a person underwrites the case rather than a rule screening it out. Most pessimistic advice online collapses that distinction.
One honest negative finding belongs here. We could not locate any published criterion setting a standalone loan to value cap for secured arrears aged two to three years, so anyone quoting a universal ceiling is describing something the criteria do not say.
Where a cap does bite, it usually comes from what you are doing with the money. One specialist guide limits debt consolidation remortgages to 90 percent against a 95 percent maximum, and one mainstream lender caps capital raising for purposes other than improving the property at 75 percent. Those penalties apply to every borrower, arrears or not.
The restrictions stack independently: the arrears set your tier, the purpose sets your ceiling. Working out which one binds your case is the job of a specialist adviser.
Arrears You Never Fully Cleared Before the Mortgage Was Redeemed
A different and more anxious situation: the arrears were still outstanding when the account closed, because you sold or refinanced away with a balance behind.
Think about it behaviourally rather than by status label, because reporting conventions vary. The account closes with its arrears history attached, carrying whatever worst status it reached.
If the property was sold and a shortfall remained, two clocks run and they do not run together. A mortgage default drops off the file six years from the default date, TransUnion (2026). The debt can be pursued much longer: under the Limitation Act 1980 a lender has twelve years for the capital, National Debtline (2026).
Note the asymmetry. Your file can forget a mortgage default after six years while the debt stays legally live for another six, so a clean file is not proof the history is closed.
Lenders also see more than the file shows. Applications routinely require three to six months of bank statements, which reveal payments to creditors or collection agencies even where the credit reference record has expired, Debt Camel (2025).
This next point ties the whole article together. Lenders keep their own internal records with no six year expiry, and may share them within a banking group, Debt Camel (2025). The one lender who always remembers your arrears is the lender you had them with.
A product transfer keeps you inside the only book where that memory never ages out. A remortgage moves you to a lender whose knowledge of you is limited to a credit file on which the markers are already fading.
One last correction, because it is the most commonly held wrong belief here. Paying arrears off does not delete the record: a late payment stays six years regardless, though its influence fades as it ages, Experian (2026).
The Old Mortgage Is Closed, but Its Payment History Is Not Gone
Redeeming the mortgage does not take the arrears with it. Closed accounts remain on the credit report for six years from the closure date, and the payment history goes with them, checkmyfile (2026).
So if you redeemed two years ago, the closed account and its full arrears grid stay visible for roughly four more years. The markers themselves disappear six years after they were recorded, on their own clock, whether or not you cleared them.
One point deserves stating exactly rather than loosely. The six years everybody quotes is the live decision-making window. Credit reference agencies hold account performance data for eleven years in total, six for live decisions plus five for profiling and statistical analysis, Experian (2026).
So a two year old arrears event sits in a mixed position: still fully visible, still inside most specialist thirty-six month windows, already outside several mainstream twelve and twenty-four month windows. That is why identical facts can be declined in one place and accepted in another, as our guide to why a remortgage gets declined explains.
The Switching Rule That Bars Only the Last Twelve Months
A widely repeated claim holds that arrears disqualify you from the modified affordability route created for so called mortgage prisoners. At rule level that is wrong, and it discourages people who are eligible.
The rule is MCOB 11.9, in force since October 2019, and it lets a lender assess a switching borrower on their record of making mortgage payments rather than running the standard affordability assessment, FCA (2026).
Its arrears bar is narrow and precise. The section applies only where, on the application date, no sum due under the existing contract constitutes a payment shortfall, and at no point in the preceding twelve months has there been such a shortfall, FCA (2026).
That is a rolling twelve months, not six years. Arrears from twenty-four or thirty-six months ago do not disqualify you from this route, provided nothing has gone wrong in the last year and nothing is outstanding today.
A second common claim is also wrong. The rule carries no date condition and no requirement that your existing lender be inactive or unregulated, and it applies where the existing contract is with that firm or a different firm, FCA (2026). It is not confined to pre-2014 or closed book borrowers.
Now the blunt part, because this route flatters to deceive. It is permissive, so lenders may elect to use it and nothing compels them. FCA analysis found around 170,000 borrowers up to date and eligible, but only around 14,000 likely to meet lender criteria and save meaningfully, FCA (2022). Its November 2021 review found the route led directly to only about 200 switches, House of Commons Library (2023).
One 2025 change bears on everything above. Since 22 July 2025 the proposed contract must be more affordable than the existing one, or than the new deal the existing lender has indicated, FCA (2026). The regulator has written the product transfer comparison into the rule itself.
Treat it as a narrow lifeline, not the main road. With arrears two or three years behind you and a clean recent record, an ordinary remortgage on normal criteria is usually more realistic, which is what our page on remortgaging with bad credit is built around.
When Your Current Lender Has No Product Transfer to Offer You
Sometimes the choice is made for you, and it lands as bad news when it is often the opposite. Several lenders require the account to be up to date before a transfer is possible at all, and one states as a condition that the account must not be in arrears. The transfer is a safe harbour for aged arrears, not current ones.
Other exclusions have nothing to do with credit. A transfer cannot add or remove a name, which matters on separation, and cannot be used to move home. It generally cannot capital raise without pulling the affordability assessment back in, and additional borrowing is likely priced separately.
So a borrower who needs to consolidate debts or raise capital has, in practice, no transfer route at all. The safe fallback is not on the table, and the only question is which lender to remortgage to.
Being pushed out feels like rejection. It is closer to a forced comparison, and it produces the exercise most people never run.
Case study: three months of arrears twenty-six months ago
A couple in the Home Counties came to us with a £520,000 home, a £338,000 balance and 35 percent equity, a loan to value of 65 percent, on joint income of £86,000. Three months of arrears twenty-six months earlier, while one of them was off work, had placed them in an adverse tier at their last refinance, and their lender offered a transfer within that range. Checked against live criteria, the arrears now fell outside one mainstream lender's two year window entirely, and the case was assessed on a stress rate well above the pay rate, the pay rate being what they actually pay monthly and the stress rate only the affordability test applied. They remortgaged at 65 percent loan to value on ordinary criteria.
This is an illustrative composite with indicative figures, not a specific client, and a comparable outcome cannot be assumed in any individual case.
Product Transfers Now Account for Roughly Three Quarters of All Refinancing
What has changed is not lender attitudes to arrears. It is the scale of the internal market, and it tells you that you are part of a very large, very quiet crowd.
UK Finance forecasts £261 billion of internal product transfers in 2026 against £77 billion of external remortgaging, UK Finance (2025). That is more than three pounds staying put for every one that moves, and roughly 77 percent of all refinancing by value.
The outturn is running the same way. In the first quarter of 2026, 499,830 mortgages were refinanced, up 33 percent year on year, and 84 percent were internal transfers, according to UK Finance data reported in June 2026. Around 420,000 borrowers never left their lender.
For context, 88,130 homeowner mortgages were in arrears of 2.5 percent or more of the balance in that quarter, slightly down on the previous one. Arrears are common, and so is quietly rolling onto the next internal rate afterwards.
Channel data explains why so much of this goes unexamined. The FCA found internal switches made up 42 percent of mortgage transactions in 2016, around 86 percent arranged direct with the lender rather than through an intermediary, and around half execution only rather than advised, FCA (2019). Execution only means nobody tested whether the wider market would do better.
The same study found around 30 percent of consumers could have found a cheaper mortgage with the same features, FCA (2019). Those figures are dated, but the structural point holds.
The regulator has been pushing one way. Rules in force from 22 July 2025 require firms to identify execution only customers who may need support to avoid foreseeable harm, FCA (2025). The reform effort aims at making it easier to leave, not to stay.
Be honest about the trade-off. If your history does still place you in the specialist tier, that generally means a higher rate than the high street, often with a fee on top, a real cost each month. What it buys is an underwriter reading your file, and a price set by more than one lender.
And if the comparison shows your lender's transfer is the strongest option open to you, take it. The point was never that the transfer is wrong. The point is that it should be a conclusion rather than a default.
FAQs
Can I remortgage with mortgage arrears from two years ago?
Often yes. Several mainstream lenders only look back six, twelve or twenty-four months for secured arrears, so an event from around two years ago can fall outside their stated window entirely. Specialist lenders look back up to thirty-six months but generally reflect aged arrears in the rate rather than in a refusal, and no outcome can be assumed for any individual case.
Do I really have to wait six years after mortgage arrears?
No, and this is the most damaging piece of misinformation in this area. Six years is how long the marker remains on your credit file and how long one high street lender asks you to declare arrears for, but that lender states such applications are considered on an individual basis. A disclosure question is not a decline rule.
Is a product transfer worse value than a remortgage?
Not on rate, generally. A 2026 consumer comparison found product transfer rates beat the same lenders' own remortgage rates in eleven of twelve loan to value comparisons. The cost of a transfer is that it can only ever be one lender's single price, quoted without any comparison, and it never re-tests whether your aged arrears still belong in the tier you were placed in.
Do mortgage arrears stop me using the mortgage prisoner switching rules?
Only recent ones. The rule bars a borrower who has a payment shortfall outstanding today or who has had one at any point in the last twelve months, so arrears from two or three years ago do not disqualify you. That said, the route is optional for lenders, permits no additional borrowing, and the regulator's own review found it produced only around 200 switches.
Does the arrears record disappear once the mortgage is redeemed?
No. A closed account stays on your credit report for six years from the date of closure, and its payment history goes with it, so a mortgage redeemed two years ago remains visible for roughly four more. The arrears markers themselves run on their own six year clock from when they were recorded, and paying them off later does not remove them.
Summary
Arrears from two or three years ago seldom shut down a remortgage. They fall outside several mainstream lookback windows, sit in the cleanest tiers at specialist lenders, and are usually reflected in price rather than refusal. The greater risk is accepting your existing lender's transfer offer without comparison, because that keeps you priced inside the one book where the arrears are never forgotten. It is worth having the comparison run properly before you sign anything.
Updated: 31 July 2026
Written by Ben Stephenson, CeMAP-qualified Mortgage Broker.
Manor Mortgages Direct is FCA authorised, FRN 496907, has traded for 25 years, is highly positively reviewed, 4.9 rated on Google, and has helped thousands secure the right mortgage. Bristol-based mortgage brokers, assisting clients nationwide.
Sources
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