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Mortgage Based on Rent Payments

See how expert advice could help secure your mortgage, even if you’ve had rent arrears

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 28, 2022

We get lots of enquiries from customers who want to know if lenders look at their monthly share of rent payments and how it affects their chances of getting a mortgage, especially if they’ve ever been in arrears.

We also speak to many people who have good rental payment conduct and want to know if their record of paying on time can be used to boost or count towards their credit score.

We have gathered all the key information you need to know here in this guide.

For the right advice on how your rental payments can affect your mortgage, make an enquiry and one of the mortgage advisors we work with will be in touch.

Are rental payments recorded on your credit file?

Your rental payments can be recorded by your landlord and may be forwarded onto credit reference agencies.

Some landlords and lettings agencies have signed up to rent reporting initiatives such as The Rental Exchange Scheme which records all data including late payments and arrears. Launched by Experian in 2016, The Rental Exchange Scheme can help private tenants boost their credit scores by paying their rent on time.

Get your credit rating

How does the Rental Exchange Scheme work?

Rather than pay rent directly to your landlord, your rent is paid to a third party called “Credit Ladder.” They pay your landlord and then pass on your proof of rent payments to Experian, who update your credit file to say whether the payment was made on time or was late.

If the payments are made on time, the record of this can boost your credit score and potentially help you get a mortgage based on rent payments.

Why would a landlord opt-in for The Rental Exchange Scheme?

The RES, also known as Credit Builder, has seen an increase in demand from landlords who want to reduce arrears by holding tenants accountable for their payments. It is thought that tenants will be more likely to pay their rent on time as they’ll want to prevent any negative impact on their credit rating.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

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Can late rental payments impact your credit score?

Paying your rent late or having rental arrears is likely to have a negative impact on your credit score as lenders will interpret your late payments as a sign that you are unreliable when it comes to paying financial commitments.

The extent of how this will affect your chances of getting a mortgage is yet to be known but it is likely to be treated in a similar, if not more severe way, those unsecured credit arrears, late payments and defaults. For more information on this, speak to an advisor.

Can other bad credit issues affect your credit score?

Yes, credit issues like the ones listed below can have a negative impact on your credit history.

  • Low credit score
  • Late payments
  • Mortgage arrears
  • Defaults
  • CCJs
  • Debt management plans
  • IVA
  • Bankruptcy
  • Repossession

If you have any of the above on your file, don’t panic. There are specialist lenders who arrange mortgages to people with these issues every day, and they might offer you a favourable deal depending on the severity and the age of the adverse credit.

For more information on how each of these can affect your mortgage application, see our bad credit mortgage information section

How much mortgage can you afford if you’ve missed rent payments?

If you have previously had problems with rental payments or paying financial commitments on time, it can be helpful to work out your budget with a mortgage advisor.

They can also find lenders that are likely to approve you and look at which interest rates you can expect to pay. From this, you and your advisor can look at your overall income and calculate how much mortgage you can potentially afford to borrow.

Comparing rent vs mortgage payments

A mortgage advisor can also compare your rent to mortgage payment ratio, to see how your disposable income may change if you get a mortgage because understanding your budget can help you keep on track with your mortgage payments.

If you want to convert your rent to a mortgage payment to work out how much mortgage you can afford, contact an expert.

What deposit do you need for a mortgage if you’ve had rental arrears?

Your deposit amount can vary depending on many factors such as the lender, your affordability and your credit score (which can be negatively impacted if you have had late rental payments.)

Most residential lenders will offer a loan to value of 85% which means that you will need a 15% deposit. However, there are some lenders who offer an LTV of 90%, even a few who will lend up to 95% of the property value.

Specialist lenders who provide mortgages for a particular niche such as bad credit mortgages may ask for a higher deposit of 15 – 25% as these types of mortgages can be seen as higher risk.

For more information on the varying factors that can affect your deposit size, contact us and we’ll put you in touch with an advisor.

How much will a lender let you borrow on a mortgage?

This will usually depend on how much you earn as well as other factors including your credit score. Most mortgage lenders will cap your loan against 4x your annual gross income (so someone earning £20k would not be able to borrow more than £80k.)

Some lenders can offer up to 5x your income, and a handful even up to 6x in the right circumstances.

If your circumstances are a little more complex than usual, for example, you have rental or mortgage arrears, or less reliable income, you may find that fewer lenders are willing to approve your mortgage, especially if you need a higher income multiple.

Find out how much you could borrow based on these income multiples by using our mortgage affordability calculator below…

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Mortgage Affordability Calculator

Our affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest.

Input full salaries for all applicants

You could borrow up to 

Most lenders would consider letting you borrow

This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.

Some lenders would consider letting you borrow

This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.

A minority of lenders would consider letting you borrow

This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.

Get Started with an expert broker to find out exactly how much you could borrow.

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Can rental payments help me get a mortgage on a non-standard property?

If you have a track record of making rental payments on time, this could boost your credit score and potentially improve your chances of obtaining a mortgage, in the right circumstances.

Non-standard or more unique buildings can be harder to resell in the unfortunate case of repossession, so they can be harder to a mortgage for with some lenders.

Such buildings include:

  • Listed buildings
  • High rise flats
  • Ex local authority
  • Uninhabitable property
  • Non-standard construction
  • Concrete
  • Flats with balcony access
  • Timber frame

For more advice on this, make an enquiry.  Alternatively, see our non-standard property section.

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Can late rental payments affect a Buy to Let mortgage?

Potentially, yes. Late rental or mortgage payments can affect your likelihood of approval for a buy to let mortgage if recorded on your credit file. Each lender has varying criteria that they use to determine the likelihood that you will keep up with your mortgage payments however, there may be still lenders who are willing to lend to you in the right circumstances.

Make an enquiry and speak to an advisor for more information on this.

How do rental arrears affect a mortgage for someone in retirement?

Lenders want to be sure that you will be able to pay your mortgage whilst in retirement, so having a good credit history that suggests that you pay financial commitments such as rental or mortgage payments on time, can improve your chances of approval with some lenders in the right circumstances.

That being said, some lenders do have upper age limits and won’t lend to borrowers over 75, whilst with others the maximum age is 85. There are a small minority of lenders that have no upper age limit and accept customers in retirement or near retirement.

For more information on this, visit our section on lending in later life. Alternatively, make an enquiry and we’ll refer you to one of the experts.

Can late rental payments affect a mortgage on a second home?

When lenders assess a mortgage application for a second home, they may have stricter criteria so your credit score can have a negative impact on your chances of approval.

Lenders want to be certain that you can afford your mortgage payments for a second property so it’s important to pay your rent or mortgage payments on time as lenders will interpret late payments as a big negative.

If you have affordability issues such as bad credit your choice of lenders may be restricted, so speak to an advisor who can find lenders that are more likely to accept you based on your circumstances.


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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

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Why you should speak to an expert

Online Mortgage Advisor offers 5-star service with access to the whole of market mortgage brokers who have extensive knowledge about which lenders are more likely to approve your mortgage.

The advisors we work with are Online Mortgage Advisor Accredited and have also undergone an LIBF Training course. These things ensure that the advice you receive is clear, understanding and helps you get the best possible mortgage deal.

Contact a mortgage expert

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry.

Ask a quick question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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