A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
If you have bad credit, in the past this would have immediately disqualified you from getting a mortgage. However, today mortgage brokers use new standards to evaluate each person’s individual case and current situation. This means that even if you have had CCJs or a low credit score in the past, you could still be eligible for a mortgage.
Please remember that a mortgage is a loan secured against your home. Your home may be repossessed if you do not maintain repayments on your mortgage or any other load secured against it. You may have to pay an early repayment charge to your existing lender when you remortgage. Think carefully before securing other debts against your home. And it is always a good idea to speak with an experienced mortgage broker who can talk you through the process and understand the options and what they mean for you.
1. What is a CCJ?
Having a County Court Judgement (CCJ) against your name can make it very difficult to do simple things like opening a bank account or getting approved for credit cards and mortgages. CCJs are court orders that are registered against you because you failed to make payments that had been agreed upon, either as an individual or company.
If you are having credit problems, it might be because there is a CCJ against your name. If you’re not aware of this, it could be because you moved and didn’t get the notice. To check, go to the Register of Judgements, Orders, and Fines website and do a CCJ check against your name for £4.
Generally, CCJs remain on your credit file for six years, regardless of whether you settle them earlier. Should you believe that the CCJs are inaccurately recorded, engaging with the credit referencing agency can expedite their removal. However, once a court issues a judgment, there are no alternative avenues for removal. It’s essential to navigate CCJs judiciously, acknowledging their impact on your credit history.
2. Obtaining a mortgage with a CCJ
Navigating the landscape of securing a mortgage with a CCJ is possible, but it entails meeting specific conditions. Several key factors influence the likelihood of success:
- CCJ Registration Date
The timing of the CCJ registration significantly impacts your chances. Generally, an older CCJ is viewed more favourably in mortgage applications.
- Satisfaction Status
A “satisfied” CCJ, where outstanding charges are paid, enhances your prospects. Some lenders prefer a waiting period of 12 months post-settlement, while others may be more flexible.
- Financial Amount of the CCJ
The monetary value of the CCJ is crucial, affecting the loan-to-value (LTV) ratio. Lenders may exercise caution if the amount is deemed too high, as it poses increased risks.
- Number of CCJs
Multiple CCJs limit mortgage options and amplify the challenge of finding a willing lender.
- Deposit Size Variation
The size of the required deposit varies based on the type and age of the CCJ. Generally, older CCJs may necessitate a smaller percentage deposit.
3. How do mortgage lenders evaluate loan applications from individuals with CCJs?
The criteria for eligibility can vary among lenders, with some categorically avoiding borrowers with CCJs while others adopt a case-by-case approach.
Key considerations in the assessment process include:
Date of the CCJ
The timing of the CCJ holds significant weight. If the CCJ was registered over three years ago, a broader range of lenders may be accessible compared to a recent registration within the last 12 months.
Value of the CCJ
Lenders often impose limits on the size of CCJs, especially for recently registered ones. For instance, Mansfield Building Society may consider lending up to 80% of the property value if the CCJ, registered within the last 12 months, is valued at £500 or less. Older CCJs, typically beyond two to three years, may encounter fewer size restrictions or none at all.
Number of CCJs
Lenders commonly set limits on the number of acceptable CCJs, often one or two. However, some lenders may be more flexible, particularly if the CCJs are sufficiently aged.
Satisfaction Status
The satisfaction status of a CCJ influences mortgage approval. While obtaining a mortgage with an unsatisfied CCJ is possible, it poses more challenges than if the matter has been fully settled. The number of lenders willing to consider an application increases if the CCJ has been fully satisfied, and a significant period has elapsed since.
Satisfied CCJs:
- Some lenders may require satisfied CCJs to have been paid off at least 12 months before the application.
- Others may accept any satisfied status, provided other criteria are met.
Unsatisfied CCJs:
- Specialist lenders might approve applications with unsatisfied CCJs if the judgment was registered long enough ago.
This nuanced understanding empowers prospective borrowers to navigate the mortgage market strategically, taking into account the intricacies associated with CCJs and lender preferences.
4. A Type of Mortgage Can Someone Apply with A CCJ
If you’re a homeowner looking to move or remortgage, the process is comparatively straightforward. For those buying a new build or entering the property market as first-time buyers, flexibility diminishes.
Some lenders may impose restrictions, such as not accepting borrowers with CCJs exceeding £1000, or requiring CCJs to be satisfied at least 12 months ago. Nevertheless, there are still viable options with lenders willing to consider applicants in these circumstances.
Securing a Buy-to-Let mortgage with a CCJ poses additional challenges, being among the most stringent scenarios. Some lenders may mandate the satisfaction of CCJs before application and generally stipulate a substantial deposit. Others might only entertain applications if the CCJ is over two years old. Despite these challenges, specialist lenders are available to navigate more challenging situations.
5. How much can I lend if I have a CCJ?
Determining the borrowing capacity with a CCJ hinges on various factors, including the specifics of the CCJ, your income, and the deposit you can provide. Lenders evaluate CCJ details and satisfaction status before confirming the maximum Loan to Value (LTV).
Typically, lenders may cap the mortgage amount at four times your annual income if you have a CCJ. However, if your CCJs are over two years old, this limit might extend to borrowing up to five times your annual income. These figures are general guidelines, subject to variations based on individual circumstances and the lender’s criteria.
Securing a mortgage with a CCJ introduces complexities due to diverse factors influencing lender assessments. Our advisors, equipped with a comprehensive understanding of your financial situation, can offer a more precise estimate of your borrowing capacity. Additionally, we provide guidance on eligible products, emphasizing the importance of a methodical and strategic approach when seeking a mortgage with adverse credit.
6. Can I improve my credit score?
There are some things you can do to help improve your credit score. A lot of it has to do with being more disciplined and consistent when it comes to managing your finances. If you anticipate a potential payment lapse, it is imperative to promptly engage with your lender, initiating a discussion about available options.
Catching up on payments, paying your bills on time, avoiding any more loans or credit cards, regularly reviewing your credit report, and ensuring the accuracy and currency of all information, including recent addresses and electoral roll details should help see your score improve over time.
Country Court Judgement (CCJ) Mortgages with Your Mortgage Experts
We are an independent mortgage broker that offers free and impartial advice. In addition, we understand the process of securing a mortgage with bad credit and can take care of the complexities involved. Our team will work hard to get you the best possible results. By assessing each situation individually, we have a better chance of success than if we were to automatically reject someone for past mistakes.
Luca Bertolino
Mortgage ExpertYour Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through Luca’s wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that clients have come to rely upon for all their mortgage and protection needs.
