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In this blog, we are going to explore if you can get a mortgage with a CCJ, what you need to know when arranging a mortgage with a CCJ, and what factors are taken into account. We have also put together some handy tools to help you including our bad credit mortgage calculator which tells you how much you may be able to borrow and a mortgage check tool to see if you have any eligibility issues.
What is a CCJ?
CCJ stands for County Court Judgement and it's a court order that obligates an individual or business to pay money owed to a creditor. They usually result when someone fails to pay a debt or commitment and the creditor takes legal action against them. They can be issued for not paying back loans or other debt repayments, mail order balances or even not paying your utility bills such as water, gas and electricity. If you ignore a CCJ the court can take more serious action, such as taking your belongings to cover the debt. The CCJ is recorded in a public register called the Register of Judgements, Orders and Fines, and remains there for 6 years. The CCJ will also appear on your credit report for this 6-year period and severely impacts your ability to get credit.
Can you get a mortgage with a CCJ on your credit file?
The short answer is, yes. There are a number of factors that a mortgage lender will take into account if you have a CCJ on your credit file. It is possible but you will find it more difficult than someone with an unblemished credit history. The CCJ is an indicator to any other lenders that you have not previously paid a debt or commitment and had to have legal action taken to recover the money. It is likely that the mainstream banks and building societies will not lend to someone with a CCJ although there are more specialist lenders that will take a broader view of what happened when it happened and what has happened since. A specialist mortgage lender will often charge you a higher interest rate than a high street bank to reflect the amount of increased risk they believe they are taking.
Eligibility criteria for getting a mortgage if you have a CCJ
There are a number of different factors that a prospective mortgage lender will take into account before they make a decision on whether they will lend or how much interest they will charge you.
Date CCJ was registered:
The longer ago your CCJ was registered the less concerned a mortgage lender will be if you are able to demonstrate a clean financial record since then.
Size of the CCJ:
Lenders typically have different thresholds for sizes of CCJ. So if the balance of your CCJ was below £100 the mortgage lender will see you as a lower risk than someone with a balance of over £1000.
Number of CCJs:
This can often be the key to how risky a mortgage lender will deem you to be. More than 1 CCJ means that more than one lender has taken legal action to recover their money and means you are an increased risk. It is common that if someone has had a life event such as suddenly losing an income they may incur defaults and CCJs from a number of creditors all at the same time. In this case, the mortgage lender will want to understand what the life event was, how quickly you paid back the defaults and CCJ and what has happened since then with your finances. If you have not had a life event and regularly get CCJ's over a 6-year period, depending on the balances, you will find it much more difficult to convince a mortgage lender that you can manage your finances. This will be reflected by either a much higher interest rate and a higher deposit amount or they may decline the mortgage application altogether.
Satisfied or unsatisfied:
CCJs will be classed as Satisfied when they are repaid and unsatisfied until then. If you get a CCJ and pay it off quickly your credit profile will look much better than someone who had a CCJ 5 years ago and it's still unsatisfied. In fact, if you clear a CCJ within a month it may not appear on your credit profile at all.
How can you get a mortgage with a CCJ?
There are a few ways you can increase your chances of getting a mortgage with a CCJ, such as:
Credit Score
Tidy up your bad credit profile by paying your commitments on time, staying within agreed overdraft limits, being on the voter register and not applying for lots of new credit. Even just a short period of time with a tidy credit profile will improve your chances of getting a mortgage even if there is a CCJ on there. You can get to see your credit profile using an online service but if you need some help with this please contact us. You could even explore specialist lenders that do not base their lending decision on a credit score. You can see more about this on our bad credit mortgage page.
Bigger deposit
Increasing the size of your deposit will demonstrate you are able to save and therefore probably able to manage your finances. It can also have a number of other benefits such as getting you access to lower interest rates and, as you are borrowing less, will lower your monthly mortgage payments. You can see the impact this will have using our cost calculator.
Ask for advice
Brokers like Twin Pine Mortgages specialise in helping people with a bad credit history and people with more complicated situations. We will be able to identify which lenders would accept your financial history and then which is the best deal for you and your specific needs.
Next Steps
Twin Pine Mortgages can help and support you all the way through the borrowing process and have helped hundreds of people with CCJs get a mortgage. If you need help or have any questions you can contact us at 024 7601 7747 or hello@twinpinemortgages.co.uk