If you have a CCJ (County Court Judgement) on your credit file, finding a mortgage that will allow you to purchase a home can feel impossible – but an independent broker can help.
More mortgage lenders now than ever will consider applicants with adverse credit history, and your chances of approval are probably much higher than you may assume.
It is also important to remember that a CCJ will not remain on your credit record forever and that being turned down by one mortgage lender does not necessarily mean you will get the same response across the board.
The best option is to ensure you have professional advice, prepare your mortgage application carefully, and select the most appropriate lender.
Many mainstream mortgage lenders may automatically reject an applicant with a CCJ or other credit issues. Still, a specialist provider with more flexible lending policies may be better suited.
Factors to Consider When Applying for a Mortgage With a CCJ
The first thing to note is that a mortgage lender will always run a credit check – there is no merit in avoiding mentioning your CCJ during the application process.
When a lender runs a credit assessment, if they uncover anything you have not disclosed, there is no likelihood they will be prepared to move forward.
CCJs are not the most severe type of credit issue, and while they will influence which lenders and mortgage products to apply for, a lender will assess the circumstances, looking at:
- The value of the CCJ.
- When it was registered.
- Whether the CCJ has since been satisfied (repaid).
- How many CCJs you have on your credit file.
- Other credit-related issues.
In most cases, a CCJ will remain on file for six years, so there is quite a difference between a CCJ for a small value five years ago and a large CCJ registered in the last 12 months.
You are also more likely to secure a mortgage if your CCJ has been satisfied – that means the lender is assessing an applicant with a now concluded debt issue rather than in a current debt repayment order.
Below we will run through each of these elements to provide a little more detail about why they are important and what they mean to the mortgage lender.
CCJ Values in a Mortgage Application
A CCJ is an official record that shows that you had fallen into arrears with debt before and ended up in a court process.
There may be mitigating circumstances or context that supports your application (more on that shortly!), but the value outstanding will make a difference to your lender.
High debt levels will also affect your affordability assessment, so it is advisable to pay back as much of your CCJ as possible before applying for a mortgage.
If you are not in a position to repay the debt in full, you may be able to set up a payment plan to reduce the balance without needing to save for a considerable period.
Applicants with a high outstanding CCJ debt will normally be able to borrow less, require a larger deposit of around 30%, or may find that the lender rejects the application if the value is £1,000 or above.
CCJ Registration Date
The longer ago your CCJ was registered, the less problematic it appears to a mortgage lender.
As mentioned above, a CCJ will be removed from your record after six years, so if you are approaching that date, it may be worth delaying your mortgage application until then.
In most cases, you will find it difficult to secure a mortgage within 72 months of the CCJ registration date – if you cannot wait, you should repay as much as possible.
You may also be able to apply for a default CCJ judgement to be ‘set aside’.
That means it was administered incorrectly, or you could not defend the issue – presenting evidence that you have applied for the CCJ to be set aside may be helpful.
Example scenarios where this may apply include where the court letter was delivered to the incorrect address or where the creditor did not inform you of an obligation to pay.
Satisfied vs Unsatisfied CCJs
Every lender has a different policy, but you may find that some mortgage providers will not consider an applicant with a CCJ until the debt has been satisfied.
However, the registration date tends to be more important since you can secure a mortgage, provided the CCJ was registered more than two years ago (although some lenders specify a one-year timeframe).
Applying for a Mortgage With Multiple CCJs
One CCJ may be attributable to a one-off situation (such as redundancy or ill health). Still, if you have several CCJs on your credit report, it can be tricky to demonstrate responsible financial management to a prospective mortgage lender.
There are, though, caveats to this and if you have more than one CCJ, you will usually need a larger deposit of 25% or more.
Several recent CCJs within the last year present a much higher risk, and some lenders have a maximum cap on how many CCJs an applicant can have and still be considered for a mortgage.
Our advice is to ensure you access an up-to-date copy of your credit report, repay anything you can, and consult Think Plutus as an independent broker before you make any decisions.
Getting a Mortgage With a CCJ and Other Bad Credit Issues
A CCJ can impact your mortgage application, but if there are other bad credit issues to account for, things may be more complex.
Credit issues vary in severity, so you may need a guarantor if you have multiple credit issues to contend with.
Reports of late payments, for example, are more common and unlikely to mean you cannot get a competitive mortgage. So, it makes sense to analyse your credit report first and then evaluate how a mortgage lender will perceive the issues.
Types of CCJ
Not every CCJ will be the same, and the exact details will affect the lender’s risk assessment.
A pending CCJ does not necessarily mean you will have an adverse judgement on your credit file.
If you can repay the debt before the court date, you will have settled the matter and will not have any CCJ on your report. A CCJ is only registered when a court rules against you.
Mortgage applicants with a newly registered CCJ can also have the report removed from their credit file if they repay the debt within thirty days of the decision.
How Does a CCJ on Your Credit File Affect Your Mortgage Application?
A CCJ does not preclude you from applying for or getting a mortgage, but the exact circumstances will influence the lender’s decision.
Many lenders will allow you extra capacity on your application to provide further information.
If you can offer context to explain how or why the CCJ occurred or to demonstrate that you have since brought your finances back into good order, you may find that the lender returns a more favourable response.
Prime examples include credit issues related to separation, loss of income, redundancy, accident or ill health. If the CCJ is a one-off incident that is almost certain never to repeat, it may reduce the risk associated with your mortgage application.
Otherwise, you can proceed with a mortgage but usually find that lenders offer slightly less competitive terms to offset the risk they are assuming.
Deposit Minimums on a Mortgage With a CCJ
If you have a high-value, recently registered CCJ, a lender may ask for a deposit of 25% or above.
However, if you can wait until your CCJ is two years old or more, you may be able to apply with a slightly lower down payment.
The larger the deposit, the better your mortgage approval chances because the lower the value you need to borrow, the less risky the loan is from the lender’s perspective.
Deposits over 25% will mean you have a greater choice of lenders.
Alternatively, you could utilise a mortgage support scheme such as Help to Buy (although this is closing for applications shortly) or another initiative.
Applying for Different Mortgage Types With a CCJ on File
Residential mortgages can be easier to obtain than other lending products – for example, a buy-to-let mortgage could be more difficult to secure if you have an adverse credit report.
Purchasing a new-build property or being a first-time buyer also adds to the analysed risk and means you are less likely to be accepted with a CCJ.
The best option here is to work with Think Plutus as a whole-of-market private broker with access to over 10,000 mortgages and 100 lenders, many of which are available only through an approved network of professional mortgage brokers.
If you need help finding a mortgage of any type with a CCJ, please get in touch, and we will walk you through the next steps.
Think Plutus has years of expertise in supporting bad credit mortgage applicants to move ahead with buying their homes and offers confidential advice to help you repair your credit record and get your finances back into good shape.