Missing a mortgage payment can have serious short-term and long-term effects. Here’s what typically happens and how you can minimize the impact.
What Happens When You Miss One Mortgage Payment?
If you miss a payment, here’s what you can expect:
●
Your lender may reach out to you – This isn’t guaranteed, but many lenders will
contact you. Some also offer a grace period of around 15 days, allowing you to make the
payment without penalties.
●
Late fees may be applied – If you don’t pay within the grace period, your lender is likely
to charge a late fee. The amount depends on your mortgage agreement, so it’s worth
checking your contract.
●
Credit reporting after 30 days – Once your payment is more than 30 days late, it will
likely be reported to the credit reference agencies (CRAs) such as Experian, Equifax,
and TransUnion. This can lower your credit score and stay on your report for up to six
years.
●
Serious consequences after 90 days – If you still haven’t paid after three months, your
lender may classify your account as in default. This can cause a significant credit score
drop and could even lead to closure of your account, meaning you could risk losing your
home.
How Can a Missed Mortgage Payment Affect Your Credit Score?
Your credit score plays a key role in securing future loans and mortgages. Missing even one payment can have a noticeable effect:
●
A single missed payment can lower your credit score by 50-100 points
●
If reported to the CRAs, the missed payment remains on your credit report for up to six
years. However, its impact lessens over time, especially if you maintain consistent
on-time payments moving forward.
●
Those with higher credit scores can experience a greater drop than those with alreadys
low scores.
What to Do If You Miss a Mortgage Payment
If you’ve missed a mortgage payment, the best thing to do is pay it as soon as possible. If you
can settle it within 30 days, it might not be reported to credit reference agencies, avoiding any
long-term damage.
Even if immediate payment isn’t an option, it’s crucial to communicate with your lender. Many
lenders offer assistance, such as temporary relief or structured repayment plans, for those
facing short-term financial struggles.
To prevent future missed payments, consider setting up reminders, alerts, or automatic payments.