
Can I get a mortgage with a County Court Judgement (CCJ)?
If you have a CCJ registered against you, you can still get a mortgage.
The downside is that you have a limited number of lenders to turn to. The rates they offer and the deposit you may need are also likely to be higher than usual. In this article, we consider:
- What a CCJ is
- How underwriters perceive CCJs
- How a CCJ affects your mortgage application
- How to correctly apply for a mortgage with CCJ(s)
- Why you should ALWAYS get a copy of your credit report
Okay. You want a mortgage, but you have a CCJ registered against you. You know it will remain on file for six years. In that respect, there’s little you can do to change it. But, what are your chances of persuading a lender that you’re suitable for the loan?
It’s a tough one. A CCJ is a more severe form of bad credit than a default. Many lenders won’t even consider applicants with even one CCJ, let alone multiple.
But should you give up? Absolutely not!
Access to specialist underwriting
We have half a dozen specialist lenders prepared to consider mortgage applications with CCJs. Their underwriters don’t rely on PAYE-biased computer algorithms. Instead, they appraise each application manually, then make a decision based on its merits.
Your application’s eventual success will depend on how much risk the lender attributes to your CCJ’s status:
- How many CCJs you have registered against you
- When the court entered it onto the Register of Judgments, Orders and Fines
- How much each was for, and how much of that debt is still outstanding
- If you have paid off in full the outstanding balance since, rendering it/them ‘satisfied’
In this guide, we’ll look at all the factors that stand between your CCJ and you getting a mortgage.
Have I got a CCJ registered against me?
We tend to psychologically dust the details of any bad debt we incur under the carpet. Rest assured, lenders don’t. They’ll get a copy of your credit report and consider everything on it. It is, after all, one of the key documents they use in their decision-making process.
Your credit report will show you (and them):
- When your creditor entered the CCJ onto the Register*
- How much the amount was for
- How much, if any, of the original debt you have outstanding
- The debt’s status: satisfied (‘discharged’) or unsatisfied
With so much to consider, you must take expert advice before you approach a mortgage provider. A specialist broker experienced with bad debt will become your new best friend. They’ll show you what to do—and where to go—to ensure a lender won’t reject you outright.
*A CCJ will stay on the Register for six years unless you repay the total amount within one month of its registration. If you can satisfy the amount within its first month, the court will cancel it from the Register.
How will ‘unsatisfied’ CCJs affect my mortgage chances?
If you cannot completely pay off the CCJ in that first month, it will remain on the Register for six years. Even if you subsequently pay it off entirely, it will stay on the Register for all to see. Once paid, its status will then change from unsatisfied (debt outstanding) to satisfied (discharged).
When you apply for a mortgage, do whatever you can to satisfy outstanding CCJs. If you can’t ‘satisfy’ them all, show a lender that you’re actively doing something about them.
Your credit report will show you any outstanding bad debt you have, along with the status of each entry. The status of any potential adverse occurrence on your credit report is important. It’s often the first thing that underwriters look at. And you want to make a good first impression.
We do have a couple of lenders that will consider unsatisfied CCJs. But you’re limiting your options compared to lenders willing to consider satisfied CCJs. Knowing what’s outstanding can help you set your expectations from the outset, for better or worse.
What exactly is a County Court Judgment?
You may not be aware of missed payments or a default on your credit file. That’s hardly the case with a CCJ.
As its name suggests, the relevant court will have written to you** when it issued notice, showing:
- The date on which it registered the CCJ
- The creditor to whom you must pay the outstanding amount
- The amount of debt outstanding
- The period over which you must repay the debt, and when (in one lump sum or over a defined period).
Remember, you only receive a County Court Judgment as a last resort. Usually, the creditor has reached out to you through other channels to retrieve the money you owe them. Being unsuccessful in their endeavours, they have no alternative but the legal route.
Don’t ignore it
**In extreme circumstances, you may receive a visit from bailiffs, either to:
- Initially issue the CCJ, or
- Take payment towards the outstanding debt
Whichever way the court notifies you, don’t ignore it (whether you’re applying for a mortgage or not!). If you can’t afford to pay the amount off in a lump sum, you may be able to repay in instalments.
The problem will only escalate if you don’t respond or take action. The last thing an underwriter wants to see is an attachment to earnings notice on your credit file.
What each CCJ criterion means in practical terms
To save any ambiguity, here’s what a manual underwriter might consider when presiding over your CCJ:
Age Matters
A CCJ remains on the Register of Judgments, Orders and Fines for six years unless you pay it within a month of registration. The older a CCJ is, the better the chance you have of mortgage approval.
Some of our specialist lenders will even overlook satisfied CCJs that are more than three years old. If you have more recent CCJs, there are lenders who’ll consider you. But they are the exception, not the rule.
Lenders do change policies, and for all sorts of reasons. Be candid with our brokers when you talk to them. Let them know how old your CCJs are, and whether they’re satisfied or unsatisfied.
Satisfied (discharged) vs unsatisfied CCJs
Getting a mortgage with an outstanding CCJ is challenging. Even specialist bad credit lenders like to see that your circumstances have improved since you incurred the Judgment.
A handful of niche lenders will consider you, though. But again, age is important. If an unsatisfied CCJ is less than two years old, you may have to wait.
Even with an aged, unsatisfied CCJ, other factors will also need to align. A lender may ask you to find a larger deposit. And the interest rate a lender offers may be significantly higher than the best rates available on the market.
How many and how much for
An underwriter will take into account both the number of CCJs you have and their total value.
Mainstream lenders who consider CCJs cap the total value they permit, whether the CCJ is satisfied or unsatisfied. If you’ve had CCJs for anything close to four-figure amounts, you’ll need to turn to a specialist lender.
It’s a similar story with multiple CCJs. For most lenders, one is the most they’ll consider. If you’ve had more than one issued in the last six years, a specialist lender will be your only option.
Ideally, if you’ve had a CCJ, it should have been several years ago, be satisfied, and it should not be for a significant amount. The more you have, the more recent they are, and the higher their amount, the fewer your options.
Why you must approach a specialist mortgage broker
Here’s why it’s so important to use a specialist broker. If you apply without seeking advice, the likelihood is that a lender will reject your application.
In addition to your CCJs, the last thing you want is a failed search on your credit report. A failed search could deter a lender who may otherwise have offered you a mortgage.
Prevention is always better than cure. That’s why you should enlist expert help before applying, not after.
How CCJs impact your mortgage offer
Any mortgage offer reflects a lender’s attitude to risk and the criteria they use to determine that risk. CCJs restrict the number of lenders you can approach. They also impact the deposit you need to save and how much you can borrow.
A larger-than-usual deposit/maximum LTV
The best mortgage rates typically require a 10% or 15% deposit. A specialist lender may ask for a deposit of that size if your CCJs are older and were for minimal amounts. It’s unlikely that you’ll qualify for a 5% deposit mortgage, regardless of the status of your CCJs.
You may find that a specialist lender asks for more than that if you have a more recent CCJ. Be prepared to save anything from a 20%-30% deposit for multiple or recent CCJs.
Indirectly, this puts a cap on the amount you can borrow. Imagine the house you want to buy is on the market for £300,000.
If the lender offers you an 85% LTV mortgage (15% deposit), you’d only have to find a deposit of £45,000. In real terms, your mortgage loan would then be for £255,000.
If their offer were 70% LTV (30% deposit), you’d have to put down £90,000. That means the maximum loan they’d offer you is £210,000. This lower ceiling reduces their risk exposure, based on how you’ve met their mortgage lending criteria.
Why you must get a copy of your credit report
The first step is to get a copy of your credit report. You would be amazed at how many people don’t before applying for a mortgage. Only by having this document can you start making reparations towards outstanding debt.
Look at everything on there that could be bringing your credit rating down:
- Past associations with financial products
- Missed payments
- Too much outstanding debt compared to your maximum credit ceiling
- Electoral roll status
- CCJs and defaults
- CCJs and defaults on your file that shouldn’t be there!
If you have a CCJ, you need to remedy all other factors that might make an underwriter think twice. If you are unaware of these issues, you cannot address them. That includes getting a CCJ cancelled if you believe it shouldn’t be on your credit report.
A mortgage is the biggest loan most of us ever take out. And we realise that you may not be able to satisfy all adverse credit issues. However, at the very least, show an underwriter that you’re taking debt seriously. If you’re not taking action on old debt, an underwriter will think:
If you can’t handle the small stuff, how on Earth will you cope with a mortgage?
Lenders’ mortgage criteria are all about identifying the risk posed if they lend to you. Our experienced brokers can help you determine which lender is most amenable to your risk profile.
We will always put your needs first when considering the mortgage that will help you take the next step. Talk to us for free and in total confidence today: 0208-421-7991.
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