Can you get a mortgage with a CCJ
It is possible to get a mortgage with a CCJ, however, it is a major credit issue that can make it challenging to get a mortgage. Eligibility criteria depend on whether the CCJ is settled, how recent it is, the amount paid, and whether you have other credit issues.
An experienced bad credit mortgage broker can help you identify potential lenders and help you through the application process to boost the chances of qualifying for the loan if you have a bad credit history.
Read on to learn more about how to get a mortgage with a CCJ.
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How Many Points Does a CCJ Affect Your Credit Score By?
A County Court Judgement or CCJ lowers your credit score by about 250 points. In most cases, you may have already had a dip in your credit score due to the default that led to the CCJ. Settling the CCJ does not affect the credit score. However, it improves your credit report. It indicates that the CCJ has been settled, which can improve your bargaining power with a bad credit mortgage lender.
Do I Have to Pay Off a CCJ Before Applying for a Mortgage?
Whenever possible, it is best to pay off your CCJ before applying for a mortgage. If you pay it off within one month of the CCJ notice by the court, it will not reflect in your credit report. Therefore, it will not affect your credit rating, and you can go on to apply for credit at fair market interest rates and credit limits.
Conversely, if you pay it after one month, it will be recorded in your credit report as satisfied but will continue to reflect for six years. However, it will impact your ability to qualify for a mortgage less than an unsatisfied CCJ.
Any further missed payments can result in the lender or the court taking additional measures to recover the debt owed. You could face charging orders, issuance of a warrant of control, attachment of earnings order, or a bankruptcy petition. If your creditor applies to make you bankrupt, it will be another additional credit issue on your report, making it harder to qualify for a mortgage.
Eligibility Criteria for Mortgage with CCJ
The eligibility criteria for a mortgage with CCJ varies from lender to lender. Generally, bad credit lenders assess your application for a mortgage with a CCJ depending on factors like the amount owed on the CCJ, whether the CCJ is satisfied, and how recent it is. Below is a closer look at the eligibility criteria for a mortgage with CCJ.
How Recent Is the CCJ?
Getting a mortgage with a CCJ three years or older is easier. Chances of qualification are much narrower if the CCJ was registered less than one year ago.
Whether the CCJ Is Satisfied
A satisfied CCj is the best outcome before applying for a mortgage and most CCJ mortgage lenders will require you to satisfy the CCJ to consider you for a mortgage. However, a few don’t mind that the CCJ is not satisfied as long as you show proof that you pay the instalments on time and can afford to take on more debt.
Value of the CCJ
Aside from the date of the CJ and whether it is satisfied, lenders also consider the total CJ amount in the assessment of your mortgage application. The CCJ amount is a particularly important factor if the CCJ is less than three years old and unsatisfied. The higher the CCJ amount, the lower your credit limit and the higher the interest rate.
If the CCJ amount is unsatisfied, it won’t be easy to get approved. Some lenders have a predetermined CCJ amount limit, above which they will not approve your mortgage application. The CCJ amount can also impact the required deposit, with some lenders requiring up to 30% of the borrowed principal amount.
Number of CCJs
The number of CCJs on your credit report also influences whether mortgage lenders consider your application. Multiple CCJs will deter most lenders as they indicate that you cannot pay debt and adhere to payment terms. It won’t be easy to buy a mortgage if you have multiple CCJs in less than one year. If the CCJs are more than three years old, some bad credit mortgage lenders may consider your application but require a higher deposit of up to 25%.
Which Type of Lenders Offer Mortgages with CCJ?
It is unlikely that a high street lender will offer you a mortgage with a CCJ in your credit report. However, specialist mortgage lenders are a great option for CCJ mortgages. Despite the borrower’s adverse credit history, they are more lenient with their terms of qualification and assess applications on a case-by-case basis. However, this comes with a higher interest rate, high deposit requirement, and low credit limit.
Which Type of Mortgage Can You Apply for With a CCJ?
The easiest type of mortgage to apply for with a CCJ is a remortgage. It is particularly easy to remortgage with the same lender as most do not conduct an inquiry into your credit history or affordability. However, if you do not qualify for a mortgage, you can take up equity release loans against your accrued equity in the house.
It is much harder to get a self-employed mortgage or a new mortgage if you have a CCJ. The eligibility criteria for a new mortgage are less flexible. Most lenders, including specialist and bad credit mortgage lenders, will require you to satisfy your CCJ before applying for a new mortgage.
You may also consider applying for a joint mortgage. The lender will assess your credit histories and affordability to determine if you qualify. If your partner does not have a significant credit problem, you have a better chance of qualifying despite having a CCJ. However, it will be much more difficult if both of you have a CCJ or major credit issues.
How Much Can You Get for a Mortgage with a CCJ?
The credit limit for a mortgage mainly depends on your income. Typically, lenders provide a credit limit of four to five times your income. However, other factors come into play and can lower your credit limit. Your credit limit for a mortgage with a CCJ will depend on how recent the CCJ is, if there are multiple CCJs, the amount owed, and whether the CCJ is satisfied. The lender will also check to see if you have other adverse credit issues on your credit file, e.g. defaults, bankruptcy, etc.
Your credit limit is also determined by the lender’s assessment of your affordability. They will look at your employment history, debt-to-income ratio, and recurring expenditures. Your credit report will indicate if you have other credit accounts, such as a credit card or a secured loan, and how much you owe. The higher your disposable income, the more likely you will qualify for a higher credit limit.
Finally, your deposit amount influences your credit limit. If you have saved up for a higher deposit percentage, you may have leeway for negotiation with the lender for a higher credit limit.
Work with a Specialist Broker to Get a Mortgage with a CCJ
Specialist mortgage brokers offer your debt advice to help improve your credit score before applying for a mortgage with CCJ to enhance the chances of qualifying. They also know the most suitable specialist mortgage lenders and their eligibility criteria. Therefore, they can match you with a specialist lender who will likely approve your application. They can also help you with the application process and negotiation of the repayment terms. Contact us to speak to your mortgage broker for assistance with getting a mortgage with CCJ.
How to Apply for a Mortgage with CCJ
Below are the general steps to follow when applying for a mortgage with a CCJ
Review Your Credit Report.
Check What Is Indicated about Your CCJ by the 3 Credit Reference Agencies Regulated by the Financial Conduct Authority
It is essential to check all three reports to ascertain that the CCJ information recorded is accurate. Besides, you do not know which credit agency your lender will refer to, yet you need a point of reference.
Settle or Reach a Repayment Agreement with the Lender or through the Court
The best option would be to pay off the CCJ amount and have its status updated to satisfied in your credit report. However, if that is not possible, negotiate a favourable repayment plan with the lender and pay your instalments on time.
Contact a Bad Credit Broker
They will help you to identify lenders suitable for you.
Submit Your Application
Your bad credit broker will guide you through the application process and how to customise it to improve your chances of qualifying. They will also guide you through the type of documents and proof to prove your affordability and creditworthiness.
How to Increase Your Chances of Getting a Mortgage with a CCJ
Here are tips for increasing the chances of getting a mortgage with a CCJ.
- Wait. If you have a recent CCJ, wait two to three years before applying for a mortgage. In the meantime, keep up with your monthly repayment instalments or pay off the entire CCJ amount. However, if you need the mortgage as soon as possible, allow one year since the CCJ was registered to increase your chances of qualifying. You could also wait six years for the CCJ to be removed from your credit file. That way, you can apply like any other borrower who does not have adverse credit issues.
- Improve Your Credit Rating. In the months leading to your mortgage application, take measures to improve your credit rating. Although it takes a long time to improve your credit score significantly, there are some measures to prove to potential lenders that you have gotten better at debt repayments. For instance, avoid exceeding your limit on credit cards. Or, consolidate multiple credit cards and personal loans for easier repayments. You can also take up short-term credit-building loans. Ensure to pay your utility bills on time.
- Save Up for the Deposit. Bad credit mortgages are generally low LVT, which means you will be required to make a higher deposit. Therefore, start putting aside money for a deposit as early as possible to enable you to accumulate a large deposit and increase your chances of qualifying for a mortgage with a CCJ.
- Get debt advice. If you are struggling to keep up with your debt repayments, get professional advice on better debt management to prevent lowering your credit score further. The professionals will help you with budgeting and offer tips for a debt management plan.
- Consult with a Mortgage Advisor. They will help you develop a strategy to improve your chances of qualifying for a mortgage with a CCJ. For instance, they will help you understand most specialist lenders’ eligibility criteria, know about different mortgage options, and provide tips for meeting the qualifications. They can also help with your application and negotiation of repayment terms.
If you are looking for a CCJ mortgage broker then contact us now for expert advice