Arrangement to Pay Mortgage: How Lenders Treat ARP Markers
An Arrangement to Pay (ARP) is an agreement made with a lender to temporarily reduce or restructure your monthly repayments. ARPs are often used during periods of financial strain, such as loss of income, increased living costs or unexpected expenses. While helpful in the short term, borrowers often worry how an ARP might influence their future mortgage prospects.
This guide explains how lenders assess an Arrangement to Pay mortgage application, how ARP markers appear on your credit file and what factors influence approval chances. This article provides general information only and does not offer regulated mortgage advice.
What Is an Arrangement to Pay (ARP)?
An Arrangement to Pay is an informal repayment agreement between you and a creditor. Rather than missing payments entirely, you pay a reduced amount for a set period.
ARP markers are placed on your credit file to reflect the adjusted repayment plan. These markers can:
- Remain visible for six years
- Affect credit scores
- Influence mortgage eligibility
Although ARPs are not as severe as defaults, they still signal financial stress to lenders.
Do ARP Markers Affect Mortgage Approval?
Yes — an ARP marker has a noticeable impact on mortgage eligibility.
Lenders view ARPs as evidence that the borrower struggled to meet full contractual payments.
ARP markers can affect:
- Lender choice
- Deposit requirements
- Mortgage rates
- Maximum borrowing amount
- Overall approval chances
Some high street lenders may decline applications while an ARP is active or recently completed.
How ARPs Appear on Your Credit File
On your credit reports, ARPs are usually shown as:
- “Arrangement to Pay” next to the account
- A flag indicating reduced payments
- Payment history markers showing non-standard repayment amounts
Lenders look closely at:
- When the ARP started
- Whether it is still active
- When it was completed
- How repayments were managed afterwards
Even after completing the ARP, the marker remains for up to six years.
How Long Does an ARP Affect Mortgage Eligibility?
ARP Still Active
Most mainstream lenders will not accept applications. Specialist lenders may consider depending on affordability and stability.
ARP Completed Within Last 6 Months
High street lenders are cautious. Many applicants rely on specialist lenders at this stage.
ARP Completed 6–12 Months Ago
Options begin to improve, but underwriting remains detailed.
ARP Completed 12–24 Months Ago
Some mainstream lenders may consider the application depending on overall credit conduct.
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ARP Completed Over 2 Years Ago
If all other behaviour is stable, many lenders treat the ARP as historic.
Why ARPs Matter to Mortgage Lenders
An ARP signals that the borrower could not meet normal payments, which may indicate:
- Budgeting challenges
- Temporary or structural financial pressure
- High reliance on credit
- Irregular cash flow
Even if the ARP was used responsibly, lenders still treat it as a risk indicator.
Does Settling the ARP Improve Your Chances?
Yes. Completing an ARP and returning to normal payments helps demonstrate:
- Improved stability
- Responsible debt management
- Recovery from temporary financial pressure
Lenders view settled ARPs far more positively than ongoing arrangements.
How Lenders Assess an Arrangement to Pay Mortgage Application
Lenders don’t judge ARPs in isolation. They assess the entire financial picture.
1. Recency of the ARP
The more recent the ARP, the greater the impact.
Underwriters particularly scrutinise the last 6–12 months.
2. Duration and Severity
Lenders consider:
- How long the ARP lasted
- How much payments were reduced
- Whether arrears occurred
- Whether the ARP was used across multiple accounts
Short, one-off ARPs are less impactful than long-term arrangements.
3. Conduct Since the ARP Ended
Strong post-ARP behaviour can offset the negative effect.
Lenders look for:
- On-time payments
- Reduced balances
- Low credit utilisation
- No new adverse credit
Consistency is key.
4. Bank Statements
Underwriters examine 3–6 months of statements for:
- Regular income
- Predictable spending
- No overdraft reliance
- No returned direct debits
- Evidence of financial stability
Bank statements carry significant weight when adverse markers exist.
5. Deposit Size
A higher deposit reduces lender risk.
Typical outcomes:
- 5% deposit: Very limited options with recent ARP
- 10% deposit: Specialist lenders may consider
- 15–25% deposit: Wider choice and improved rates
- 25%+ deposit: High street lenders more open, especially if ARP is older
6. Type of Credit Involved
Some ARPs carry more weight than others.
Higher-risk ARPs include those linked to:
- Credit cards
- Loans
- Car finance
- Overdrafts
Lower-risk ARPs may include:
- Mobile phone contracts
- Small retail accounts
High Street vs Specialist Lender View
High Street Lenders
Typically require that:
- The ARP has ended
- Strong repayment conduct is visible afterwards
- No other recent adverse exists
- Affordability is strong
They may not accept applications during or soon after an ARP period.
Specialist Lenders
More flexible, especially when:
- ARPs are recent
- Income is complex or variable
- There is other minor adverse credit
Rates may be higher, but lending criteria are more accommodating.
Does an ARP Affect Mortgage Rates?
Potentially — yes.
Mortgage rates may be higher if:
- The ARP is recent
- Multiple ARPs exist
- Other adverse credit is present
- Deposit size is small
- Bank statements show instability
As the ARP ages, the impact on rate options usually reduces.
Common Scenarios
Scenario 1: ARP completed 3 months ago
Specialist lenders most likely; high street lenders unlikely.
Scenario 2: ARP completed 12 months ago, clean credit since
Some mainstream options may be available.
Scenario 3: ARP active on a credit card
Lenders likely to wait until the arrangement ends.
Scenario 4: Multiple ARPs, all completed over 2 years ago
Approval possible with strong affordability.
Scenario 5: ARP during COVID-19 due to temporary income drops
Lenders may consider context if repayment behaviour is now stable.
How to Strengthen Your Application (General Information Only)
Applicants often choose to:
1. Allow time to pass after the ARP
Recency is one of the most important factors for lenders.
2. Keep all accounts up to date
Recent stability is critical.
3. Reduce credit balances
Helps affordability and credit utilisation.
4. Avoid new credit applications
Prevents additional searches and complexity.
5. Maintain clean bank statements
Predictable monthly conduct reassures underwriters.
6. Build a stronger deposit
Provides more lender choice.
Summary
An Arrangement to Pay mortgage application is still possible, but the success of the application depends on:
- Whether the ARP is still active
- How recently it ended
- Duration and severity of the ARP
- Overall credit profile
- Income and affordability strength
- Bank statement stability
- Deposit size
A settled ARP with strong recent conduct gives lenders far more confidence than one that is recent or ongoing.
This article provides general information only. For personalised support, regulated mortgage advice is required.
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Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.