What is a CCJ and what happens if I get one?
A CCJ (County Court Judgement) is a type of marker on your credit report that indicates that you have been subject to a Default that you have not repaid within 30 days and therefore your debtor has taken you to court to reclaim what’s owed to them.
Whether or not you satisfy (repay) the CCJ, it will remain on your credit file for 6 years, making it difficult to obtain further credit, especially if it happened fairly recently.
How do I know if I have a CCJ?
You will typically have been notified of your CCJ via post or email and been given a date by which you need to repay, however, you can also check your credit report for free online on sites like Checkmyfile.
Are there any lenders that will accept a CCJ?
Yes, there are specialist Mortgage Lenders that are specifically set up to provide bad credit mortgages, in fact. Each has their own set of criteria, however, so it’s important to seek guidance from a broker with experience in bad credit mortgages. There are also high street lenders that operate in the adverse credit space, however, their criteria are much stricter.
How old does a CCJ have to be to get a mortgage?
You will tend to find that the market opens up for you considerably three years after it was registered. That said, there are lenders that are willing to look at CCJs as recent as six months old. In this instance, the LTV (Loan to Value) may be lower and the interest rate will almost certainly be higher than it would if you didn’t have credit issues.
What criteria do I need to meet?
The criteria vary from one lender to the next, but if you have bad credit, it will help if you can closely match the other criteria closely. Of course, you’ll have the standard mortgage criteria such as:
Affordability and income type – lenders tend to prefer employed over Self-Employed income, however, so long as you can demonstrate stable income that provides you the means to repay the loan, there will be a lender that can help. A typical applicant can borrow four and a half times their annual household income, however, professionals and high net worth clients are often able to borrow at higher multiples than this.
Some lenders may reduce the income multiples and/or Loan to Value available to you if you have poor credit, however.
Deposit – It’s possible to secure a mortgage with as little as 5% deposit, however, you should bear in mind that offering a larger deposit will provide you with more options, particularly if you have CCJs.
Those lenders willing to consider more recently registered CCJs will generally ask for larger deposits, and this could be anywhere between 10-25%.
CCJ Specific criteria – Again, this varies substantially from one lender to the next, and there are less high street lenders available in particular, especially if your CCJ is newly registered. All lenders assess risk differently, however, and whilst some will be concerned with the date on the CCJ, others will be more interested in whether or not it’s been satisfied.
Things that bad credit lenders will typically consider in terms of the acceptability of your CCJ are:
- How long ago it was registered – Some lenders will look at CCJs registered within the last 12 months however, high street lenders generally prefer this type of debt to be 3 years or older
- Number of CCJS – Whether there are more than one CCJs or other credit issues to consider alongside it will make a difference. Some lenders will specify that they only accept a certain number of CCJs and/or defaults in the last 2 years, usually a maximum of 2
- What the missed payment(s) were for – Mortgage Lenders tend to frown upon missed mortgage payments, so if your CCJ is down to this type of infraction, some lenders will be less willing to help. There is also more leniency on things like missed phone and utility payments than when secured loans or credit agreements have been breached
- Whether or not it’s been satisfied (repaid) – A lot of lenders will only accept satisfied CCJS and may also have an additional requirement that it’s been satisfied for a particular length of time, typically 12 months or more. There are lenders that will look at unsatisfied CCJS however, providing you meet their other criteria
- The total value of the debt – The smaller the outstanding amount, the less problem a CCJ will typically cause, however, some lenders will have maximum debt size criteria, which typically ranges between £1000-£2500. The older the debt is, the less the size of it will be relevant
- Why it occurred – Some of the more specialist lenders are a bit more flexible with bad credit issues and will often take into account the reason for the bad credit. If it was the result of life circumstances, such as death in the family, lenders are typically more willing than if you have simply been irresponsible with your finances
Will a CCJ affect my remortgaging?
It can do, but there are a couple of factors that will determine how much of a problem this will be. First of all, it depends on the lender, as with other types of mortgages, some are more willing to consider bad credit than others, and the same factors will come into play in regards to the age and size of the debt, etc.
The other thing that can make a significant difference is the level of equity you have in your property. The greater equity held in your home that can be used as security for the remortgage, the less impactful your credit history will be.
What happens once I’ve paid the debt?
Once you’ve repaid the debt it will show as satisfied on your credit record and in time, there will be more lenders available to you. Bear in mind that this may not be immediate, as some lenders will need the CCJ to have been satisfied for a certain period of time, prior to considering your application.
What other advice do you have on CCJ mortgages?
Applying for a mortgage with a CCJ can be daunting, but here at Mortgages by McAteer, we have plenty of experience in bad credit mortgage applications. We have good relationships with specialist lenders that can be more flexible about CCJs and can help you find a lender whose criteria you’re able to meet.
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YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.