Which Lenders Consider You After Recent Mortgage Arrears?
- Jul 31
- 16 min read
Find out why lenders measure secured arrears in months rather than pounds, and what clearing them before applying actually buys you.
Quick Answer
Mortgage arrears, meaning secured arrears on a home loan rather than rent arrears, are counted in months at worst status. Several mainstream lenders consider applications showing up to two months in the last two years, and the specialist tier goes further, provided your status has been clean for three to six months.
The unit matters more than the amount. A missed mortgage payment is reported to the credit reference agencies as a single status digit describing lateness in months, and lending criteria are written against that digit. Nothing in the published criteria reviewed for this piece sets a pounds threshold for secured arrears.
That produces two results borrowers rarely expect. There is no arrears amount too small to count, because a thirty pound shortfall that tips the marker counts as one month. And clearing the arrears restarts the clean-months clock without changing which tier you fall into, because criteria key to the worst point you reached, not to the balance today.
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 who fell behind during a redundancy, landlords carrying a status marker from a rental property, and borrowers facing a product expiry within the year, who need to know which lenders consider a recent mortgage arrears file.
Key Points
Lenders count months at worst status, never pounds
No minimum: a £30 shortfall counts as one month
Clearing arrears restarts the clock, cannot move your tier
Table of Contents
Two Months Behind Is a Count, Not an Amount
First, the boundary. This piece is about mortgage arrears, the secured kind, reported by your lender against the mortgage account itself. Rent arrears behave completely differently and we handle them separately in our guide to getting a mortgage with rent arrears.
If you have fallen behind in the last year or two, the instinct is to work out how much. That is not the question an underwriter asks. They want to know how many months' worth of contractual payment you were behind at your worst point, and how long ago that point was.
UK Finance (2026) counted 79,110 homeowner mortgages in arrears in the first quarter of 2026, around 0.91 per cent of all homeowner mortgages, alongside 8,960 buy to let mortgages. Both figures fell on the previous quarter.
The shape of that number is the part almost nobody reports. Of the 79,110, some 27,290 were between 2.5 and 5 per cent of the outstanding balance behind, while 29,670 were more than 10 per cent behind. The distribution is barbell shaped rather than shallow, with the largest cluster at the deepest end. A borrower one or two months down sits in the smaller, shallower group, with better options than the aggregate implies.
There is also a measurement trap in that statistic. UK Finance counts a mortgage as in arrears only above 2.5 per cent of the outstanding balance, while credit files and lending criteria count in months. Two months behind on a large mortgage may fall under that threshold and never appear in the national figures, while carrying a status marker that governs your placement for three years.
The Unit Is Months at Worst Status, Never Pounds
Every month your lender sends the credit reference agencies a single character describing the state of the account. TransUnion (2024) publishes the codes, and there is no pounds field among them.
Payment status code | What the lender is reporting |
0 | Payments are up to date |
1 | Payments are up to one month late |
2 | Payments are up to two months late |
3 | Payments are up to three months late |
6 | Payments are six months or more late |
D | The account is in a default status |
An arrears balance in pounds is shared too, but as a separate field, which the Credit Information Group Board (2026) requires to be updated regularly. The money data exists on your file. It is simply not what the criteria are written against.
Criteria read against that character. Published forms in force today include zero in twelve months and one in thirty six months at worst status, a cap of two months' arrears in two years with none in the last six, and a maximum status of two in twenty four months. All count months.
Worst status means the deepest point the counter reached inside the window, not the number of times it moved. Dipping to status 1 on three occasions still reads as worst status 1. No lender defines the phrase in published copy, so treat that as the reading the tables only make sense under, and see our note on what worst status means on your credit file.
Now the consequence borrowers find hardest to accept: there is no pounds threshold for secured arrears anywhere in the criteria reviewed. A thirty pound shortfall that tipped the marker to 1 counts as one month, exactly as a three thousand pound one does.
Unsecured adverse, by contrast, is forgiven by published rule all the time. One lender's criteria ignore communications and utilities defaults outright, another disregards individual defaults up to two hundred pounds each, and a third accepts unsatisfied defaults under fifty pounds. No equivalent exists for a missed mortgage payment.
The correction: this is not the same as saying arrears are worse
A claim circulates widely that one missed mortgage payment weighs more than several unsecured defaults. Published mainstream criteria contradict it often enough that it cannot honestly be stated as a rule.
One high street lender tolerates a missed mortgage payment within twenty four months while requiring no defaults or judgments registered in six years. Another accepts two months' arrears within two years but declines on a single satisfied judgment over five hundred pounds. On both, the unsecured marker is the harder bar.
No lender, trade body, credit reference agency or regulator publishes a statement that secured arrears outrank unsecured defaults as a matter of principle. It is underwriting convention, not published rule. The defensible point is measurement rather than severity: secured arrears sit on a different scale, so no amount is small enough to be ignored and nothing you pay makes one acceptable.
One Month of Secured Arrears Versus Three
The gap between status 1 and status 3 is not a gap of degree. It is the difference between sitting inside and outside most published criteria.
The counter has rules about how it moves. The Credit Information Group Board (2026) states that arrears should generally only increase by one month at a time, 1 to 2, 2 to 3 and so on, rising to a maximum of 6 until the lender defaults the account or the borrower brings it back in order. Coming down is different: the same guide allows the code to jump several steps where significant payments are made or the shortfall is capitalised.
What it tracks is cumulative shortfall expressed in months of contractual payment, not the number of times something went wrong. Pay half your mortgage for four consecutive months and you have not missed four payments, you have accumulated two months' worth of shortfall, and the marker typically reads 1 and then 2. Miss one whole payment and pay normally afterwards, and you sit at 1 until the shortfall clears.
Be careful with the arithmetic you may have seen elsewhere. There is no published UK formula converting an arrears balance into a month count, and the industry guide declines to give one. Anyone quoting you balance divided by monthly payment is describing a convention rather than a rule.
In practical terms, at worst status 1 you sit inside the entry tier of several specialist ranges and inside at least two mainstream criteria sets. At worst status 2 you remain inside a couple of mainstream criteria that cap at two months in two years, though the recency bar still has to be cleared. At status 3 you are into the middle specialist tiers, where one published table permits three in thirty six months at worst status. Pricing steps up at each move.
Arrears Still Running at Application Versus Arrears Cleared
Live arrears at the point of application are a decline almost everywhere, and usually an explicit one. One specialist range states across every tier, including its loosest, that secured arrears recorded three months before application are not accepted. A building society declines any application showing mortgage or secured arrears in the last six months, and two further lenders publish the same six month bar in different words.
So the recency bar generally sits at three to six months of clean status, and the status has to have returned to 0. That is the first thing clearing buys you. Until that clock starts, nothing else on the file gets a hearing.
One genuine exception is worth knowing about. At least one lender permits a product transfer for an existing customer with up to two mortgage payments currently outstanding, provided the last three months' payments have been made. That is your current lender re-papering your own loan rather than a move to a new one.
Staying put is therefore a materially different proposition from remortgaging elsewhere. Ask your existing lender what its retention criteria say before you assume a move is necessary, particularly if your product is close to expiry. Readers who have not yet established whether anyone in the market can help may prefer to begin with our wider guide to mortgages with bad credit and come back here afterwards.
Remortgaging Fourteen Months After Two Months' Arrears
Here is how the pieces fit together. The following is an illustrative composite rather than a real client, with figures chosen to be realistic.
A PAYE applicant in the North East was made redundant in early 2025 and spent eleven weeks out of work. The mortgage fell two months behind against a property valued at £215,000 with a balance of £161,000, so roughly 25 per cent equity. The worst status marker reached 2 in May 2025, fourteen months before the remortgage application, and the account returned to status 0 within seven weeks of a new job starting. Household income at application was £48,500 with no other adverse credit on file.
On worst status 2 inside twenty four months, the entry tier of most lenders was closed. Two mainstream criteria sets that cap at two months' arrears in two years remained open in principle, and several specialist tiers were open comfortably. The case went to the specialist tier, because the redundancy fell inside the wrong twelve month window for the mainstream options.
One note on affordability, because the two figures get conflated. The pay rate quoted on the product is one thing; the stress rate the lender applies when testing whether payments are sustainable is separate and higher, and the case is assessed against the stress rate.
The honest trade off: the specialist route completed, and it cost more each month than the mainstream product the same applicant would have qualified for with a clean file. Waiting ten months might have opened cheaper options, but the existing product was expiring onto a reversion rate that cost more again. That arithmetic is the real decision.
Secured Arrears on a Buy-to-Let Versus on Your Own Home
Criteria generally do not distinguish which property the arrears sat on. The line on the table reads mortgage and secured loan arrears, and it captures your residential mortgage, a buy to let, a second charge and a secured loan alike. A landlord who fell behind on a rental property carries the same marker into a residential application.
What does differ is the threshold applied when the new application is itself a buy to let. On the evidence available, buy to let entry criteria are tighter on secured arrears than residential ones. One lender's buy to let guide requires worst status 0 in thirty six months where its residential entry tier permits 1 in thirty six, and another buy to let lender's cleanest tier reads 0 in the last thirty six months.
Treat that as well supported rather than proven. The only like for like comparison from a single lender sets a buy to let guide dated 2023 against a current residential one, so the direction of travel looks consistent but the gap today is not evidenced.
The common assumption that buy to let is more relaxed because most of it is unregulated does not hold here. Unregulated status changes the conduct protections that apply, not the lender's appetite for a status marker. One lender states plainly in its own criteria that the Financial Conduct Authority does not regulate its buy to let mortgages, so the forbearance protections described below do not reach that lending at all.
When the Arrears Came From a Lender or Payment Administration Error
Some arrears markers are simply wrong. A direct debit cancelled at the wrong end, a payment applied to the wrong account, a servicing transfer that dropped a month. Because there is no pounds threshold and no cure by payment, a marker created by an administrative error costs you exactly what an earned one costs.
Step one is the lender, not the credit reference agency. The ICO (2026) is explicit that the company named against the entry is likely to be responsible for it. The Credit Information Group Board (2026) places a positive obligation on a lender that becomes aware it is reporting inaccurate information to complete an amendment. This is not a favour you are asking for.
Step two, run a dispute with the agency in parallel. TransUnion (2026) contacts the data supplier and aims to return an outcome by email within twenty eight days. Experian's statement of rights, under section 159 of the Consumer Credit Act 1974, gives you the right to ask for correction or removal and requires a written reply in the same period.
Two cautions there. Where a supplier does not respond, disputed data may be suppressed rather than fixed, and TransUnion (2026) states that data can be resupplied or unsuppressed at any time by the information provider. Each agency also has to be dealt with separately.
Step three, a Notice of Correction, and only where the entry is factually right but needs context. The ICO (2026) describes it as a statement explaining your situation that anyone looking at the entry should take into account, and Experian (2026) caps it at two hundred words. TransUnion (2026) warns it may slow future applications because lenders manually review the file instead of using automated decisions. That is sometimes exactly what a genuine one off error needs and sometimes actively unhelpful, as our piece on being auto declined and moved to manual review sets out.
Step four, the ombudsman. With no response within eight weeks you can refer the complaint to the Financial Ombudsman Service (2026), and you have six months from a final response in which to do so. The free service can require a firm to put things right and may ask it to compensate for distress: one published 2024 decision on incorrect adverse reporting ended with removal plus £350, though that case concerned motor finance.
On timing, be sceptical of specific promises. Lenders report monthly, so a correction agreed mid cycle typically does not surface until the following refresh. No source publishes how long a corrected entry takes to reach a fresh lender search.
Payment Holidays, Arrangements and What Reaches Your File
If your arrears arose alongside a formal arrangement, the reporting is often not what you were led to expect. The Credit Information Group Board (2026) makes an arrangement flag mandatory where a temporary payment reduction is agreed, and states that depending on the period and amount, arrears may continue to be reported. You can carry an arrangement flag and a rising status marker at once. The arrangement's protective value is against escalation to default, not against the counter.
One specific catches people out repeatedly. An interest only concession on a repayment mortgage, granted because of financial difficulty, carries an arrangement flag, and the shortfall in capital payment accrues as arrears under the industry guidance. That is close to the opposite of what most borrowers believe they are agreeing to.
The Mortgage Charter shows how narrow the exceptions are. UK Finance (2024) states that arrangements under the Charter are not reported to the credit reference agencies, and the government (2026) describes support discussions as not affecting credit scores. That sits awkwardly beside the guidance on interest only concessions, and from the outside a borrower cannot easily tell which route they were placed on.
Which is why the regulator rewrote the rule. Under FCA (2024) policy statement PS24/2, in force from 4 November 2024, firms have to tell you how an arrangement is being reported, or is to be reported, to your credit file. The drafting moved deliberately away from the implications for your credit file, because lenders cannot predict how the agencies interpret what is reported.
So ask your lender, in writing, at the time, which route you are on and exactly how it is reported. You are entitled to that answer, and it is the only reliable record you have if a marker surfaces later.
You Cleared the Arrears Before Applying. Here Is Why the Tier Did Not Move
The belief nearly every reader arrives holding is that clearing the arrears resets the position. Scrape the money together, bring the account to zero, and lenders treat you as clean again. It is the most damaging piece of widely repeated advice in this area.
Every criteria line reviewed keys to the worst status reached inside the lookback window, not to the balance today. Someone who hit status 2 eighteen months ago and cleared it the next day is assessed identically to someone who cleared it last month. The worst point is fixed history, and only the calendar moves you between tiers.
Set that against a default or a judgment. Several lenders require all defaults and judgments to be satisfied at the time of application, and satisfying them turns an unacceptable file into an acceptable one. Payment is a cure there. No act of payment makes a historic arrears marker acceptable.
So here is what clearing actually buys. It stops the counter rising. It returns your current status to 0 and starts the three to six clean months the recency bars require. It removes the currently in arrears objection that otherwise declines the case outright.
And here is what it does not buy. It does not remove the historic monthly markers, which stay on the file for six years, as Experian (2026) confirms for late payments, with the impact reducing as the record ages. It does not change which tier you fall into today, and it does not shorten any lookback window by a month.
None of this argues for leaving arrears outstanding. Clearing them is nearly always right, because live arrears block almost everything and the shortfall keeps growing. The argument is against one piece of timing: emptying your savings the week before you apply in the belief that the tier moves. The same money put toward a deposit or toward reducing the loan to value often does more, and that is worth modelling first.
One caveat, stated honestly. This is an inference from how the criteria tables are worded rather than something a lender publishes in those terms, though it holds across every table reviewed. If an adviser tells you a particular lender reads it differently, ask to see the criteria line in writing.
FAQs
How many months of mortgage arrears can you have and still get a mortgage?
There is no single market-wide limit, but the published forms cluster tightly. Several mainstream criteria permit up to two months' arrears within the last two years, and some permit only one missed payment in twelve months. Specialist tiers reach further, with one published table allowing three months at worst status within thirty six months, at a higher price.
Do I have to wait six years after mortgage arrears?
No. Six years is how long the record stays on your credit file, not a lending bar. Criteria in force today lend to borrowers with one month's secured arrears inside the last twelve months and with two months' arrears inside the last two years. The windows that govern placement are typically twelve, twenty four and thirty six months.
Does clearing my mortgage arrears move me into a better lender tier?
Not by itself. Criteria key to the worst status you reached inside the lookback window rather than to your current balance, so clearing the shortfall does not change the historic marker or the tier it places you in. What it does do is return your status to 0 and start the three to six clean months that most lenders require before they consider an application at all.
Do small mortgage arrears count if it was only a few pounds?
Yes. No lender in the criteria reviewed publishes a pounds threshold for secured arrears, which is the reverse of the position on unsecured items where small defaults are often disregarded by published rule. If the shortfall was enough to move the status marker from 0 to 1, it counts as one month regardless of the amount.
Are mortgage arrears the same as a default?
No, they are separate data items with separate codes and separate lines in the criteria. Status codes 0 to 6 describe lateness in months; a default is recorded distinctly. Under an arrangement, industry guidance says a default would not normally be registered unless the arrangement terms are broken, so the two can and do exist independently.
Do lenders see arrears from a buy-to-let when I apply for a residential mortgage?
Yes. Criteria lines read mortgage and secured loan arrears without distinguishing which property the loan sat against, so a marker from a rental property carries across. On the evidence available the reverse also matters: buy to let applications tend to face tighter secured arrears criteria than residential ones at the entry tier.
Does an arrangement to pay or a payment holiday show on my credit file?
Usually yes, with narrow exceptions. Industry guidance makes an arrangement flag mandatory where a temporary payment reduction is agreed, and arrears may continue to be reported alongside it depending on the period and amount. Where a payment holiday is built into the product, or where a Mortgage Charter route applies, the position differs, so ask your lender in writing which route you are on.
Summary
Recent mortgage arrears are judged on a different scale from everything else on your file. Lenders read months at worst status rather than pounds, so no shortfall is too small to register and no payment erases a historic marker. Clearing arrears restarts the clean-months clock and removes the live objection, but time alone moves you between tiers. It is worth mapping your own dates before you apply anywhere.
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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