Getting A Mortgage With A CCJ
Like many people in the UK, sometimes debt can build up and become unmanageable. At times if you have a missed payment, a parking ticket or any debt, the company that you owe money to can get a county court judgement (CCJ) to make you repay the debt. This is sometimes the case if you have been unresponsive or have not been in communication with the company you owe money. Once you have a CCJ, it doesn’t mean that you cannot get a mortgage you can get a mortgage with a CCJ.
A CCJ is a sign to lenders of previous credit problems. As long as you have addressed the issues, some lenders will be able to help. If you have previously tried a high street lender, you may have already been turned down for a mortgage. High street lenders tend to have rigid criteria for lending and will decline anyone that falls outside of it. A rigid lenders approach can be frustrating and is a good reason to use a specialist broker who specialises in bad credit mortgages.
Mortgage lenders who specialise in CCJ and adverse credit mortgages are more likely to accept you. However, they generally have higher interest rates than normal high street lenders. The ideal approach is to get your mortgage deal then once your credit score and debt situation have improved, you can remortgage and get a better deal, as lenders will see you as a more stable potential client.
How long will a CCJ stay on my credit file?
A CCJ will stay on your credit file for six years. If you get a county court judgement and pay it off within the first month, then it will not go on your credit file, after a month passes. If you pay it off after a month, it will be marked as satisfied on your credit file and will stay there for six years. After the six-year period is over it will disappear from your credit report and lenders won’t even know that you have had one. Any time you apply for any finance, mobile phone contract, credit card etc. the lender will look at your credit report. Having a satisfied CCJ means that lenders will see it and know that you have paid all of the debt back. The more recent the satisfied CCJ, the more cautious lenders will be.
How long after CCJ can I get a mortgage?
The longer you leave applying for a mortgage after a CCJ the more likely you are to be accepted (depending on your circumstances). This will also make it more likely to get a better rate. The longer ago the CCJ was, the less it will be taken into account in your application. CCJ’s will stay on your credit report for six years once satisfied after this they will disappear from your report so potential lenders will not be able to see that you had a CCJ.
It is important to access your credit report so that you can ensure the all of the details are correct, if your creditors have not updated their system then it may still appear as an unsatisfied CCJ, and if you have satisfied the CCJ you stand a better chance at being accepted if your credit report shows this.
CCJ’s are not the only thing that may affect your eligibility for a mortgage. Lenders will also take into account any current debt that you have and whether or not your outgoings are too high. If the lender thinks there may be a chance that you could default, then they are less likely to approve your mortgage application. When you go through your initial fact find with a specialist broker, they will get an idea of which lenders you may be eligible for which will save you being declined by lenders whose criteria you do not meet. This information will help stop any negative searches on your credit report, which will also make it harder for you to secure a mortgage.
How Much Deposit will I need for a mortgage with a CCJ?
The bigger that better, to get a mortgage if you have had a CCJ in the past 12 months you will need at least a 25% deposit. If your CCJ is over two years old, there are specialist lenders that will need as little as a 5% deposit. If you only have a small deposit and a CCJ within the last 12 months, it may be best to continue saving and reducing any debts you may have to improve your credit score while waiting for time to pass. This improvement in your credit report will give you a better chance of securing a mortgage.
Can I Get a Mortgage with Unsatisfied CCJ?
If you have an unsatisfied CCJ you may still be eligible for a mortgage, if you do not want to pay off the CCJ in full and are making monthly payments to clear it and get it satisfied, then the date that the CCJ was registered will be important to potential lenders. Specialist lenders who are will to lend to borrowers with unsatisfied CCjs will want the CCJ to be at least two years old for them to consider your application
Is the Amount of the CCJ important?
In short yes different lenders will have different criteria, and quite often the size of the CCJ is tied to its’ age when potential lenders are making a decision. For example, a lender may ignore all CCJs that were satisfied over two years ago regardless of the size of the CCJ. They may accept CCJs within the last two years provided the vale is less than £1000 in the past year and less than £2,500 before that. In general, the lower the amount on the CCJs the better, if you had a large CCJ in the past, it may even be ignored by lenders when making a decision provided it is over two years old.
Remortgaging with a CCJ
If you are looking to remortgage with a CCJ again, it is possible. Our advisors help clients with these circumstances on a daily basis. It may be more advisable to take out a second charge mortgage if your current mortgage has a good rate that you cannot better. A second charge mortgage means you will be able to use the equity in your home as security and this will put potential lenders at ease and more likely to approve your application as if you fail to repay they will be able to use your equity to repay the loan.
To sum up, you can get a mortgage if you have a CCJ but some high street lenders may decline your application depending on the age and size of the CCJ. There are specialist CCJ mortgage lenders that will be happy to consider your application. For more advice from one of our specialist mortgage brokers that help clients with CCJs secure mortgages on a daily basis give us a call on 0800 368 8879 or fill in one of our enquiry forms.
Updated: 2nd December 2019