Can Your Remortgage with a CCJ?
Yes, it is possible to remortgage with a county court judgement or CCJ but it can be challenging to find as lenders generally do not qualify borrowers with adverse credit issues such as CCJs. However, specialist lenders are more lenient and assess your case and your credit limit, interest rates, and terms of repayment, depending on how recent the CCJ is, whether it is satisfied, and the amount owed.
Typically, getting a remortgage with a CCJ rather than a new mortgage is easy. In most cases, the mortgage provider will consider your remortgage application as long as you repaid your debt.
This article will discuss the various aspects of remortgaging with a CCJ and poor credit. It covers the following along with why your should use a specialist mortgage broker.
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Eligibility Criteria for Remortgage with a County Court Judgement?
Before you have any mortgage application approved, lenders will consider the following when determining whether you qualify for a remortgage with CCJ:
When You Got the CCJ
If the CCJ is less than one year, finding a lender may be more challenging. The CCJ gets removed from your credit report after six years. Therefore, the longer it has been since you received the CCJ, the easier it is to qualify for a remortgage.
Number of CCJs
Multiple CCJs are an obvious red flag for a mortgage provider. They indicate your inability to pay debt and compromise your creditworthiness. If the lender accepts your application, you will be required to make a 25 to 35% deposit and your interest rates will be higher as you are considered high-risk.
CCJ Amount
If you have a high-value CCJ, most lenders will be adamant about qualifying you for a mortgage with CCJ, particularly if the CCJ is recent. Some bad credit mortgage lenders automatically decline your application if the CCJ amount exceeds 1000 pounds. Others offer more leeway and accept remortgage applications as long as the CCJ amount does not exceed 5000 pounds.
If the CCJ is Satisfied
This eligibility criteria varies for CCJ mortgages from one lender to another. Some require a satisfied CCJ, while others do not.
If You Have Other Credit Issues
Some specialist remortgage lenders will be keen to find out if you have other adverse credit problems. Often, a CCJ follows a default notice by the lender through the court. If you fail to settle the CCJ or pay your instalment in time, the lender can petition the court to make you bankrupt. Such adverse credit issues make it difficult to qualify for a remortgage with CCJ.
Your Affordability
Aside from assessing your creditworthiness, lenders also consider your ability to afford a mortgage loan. They ask for your income statements to determine your credit limit. Typically, bad credit lenders offer up to four to 4.5 times your annual income. Your credit limit is also determined by employment history, deposit, and the loan-to-value of your property. It is also assessed based on your debt-to-income ratio and overall expenditure. If, aside from the CCJ, you have other adverse credit issues in less than two years, your credit limit will be much lower than someone who has satisfied the CCJ and whose CCJ is more than three years old.
How Much Can I Qualify for a Remortgage with CCJ?
LVT assesses the size of your mortgage in relation to the value of the property you want remortgaged. It is expressed as a percentage and determines your credit limit. For example, if a lender offers you a 75% LVT, they will lend you up to 75% of the property value.
Typical LVT for a mortgage with CCJ ranges between 75% and 95%. Aside from the property value, the exact percentage your lender offers you depends on the eligibility criteria for when the CCJ was registered, the CCJ amount, if the CCG is satisfied, and if you have other adverse credit issues. For maximum LVT, CCJ must have been registered over three years ago, and you should not have any other negative credit issues within the last three years. Repayment requirement varies from lender to lender.
A high LVT ratio means you borrow more from the mortgage lender. You will have fewer options for high LVT for a remortgage with CCJ. Typically, lenders offer high LVT to borrowers with high credit as they consider them a lower risk. The lower your LVT, the more deals for specialist bad credit mortgages you will likely have access to.
To determine how much you need to borrow, establish your property value and check with the mortgage lender the LVT you’re likely to be eligible for. You should raise a deposit amount equivalent to the difference between the amount you’d like to borrow and the LVT value of the property. The higher your deposit, the lower your LVT, and the more options you are likely to have for a remortgage with CCJ.
You can quickly establish the value of your property online using the online property value estimator calculator. Or, you can hire a real estate agent or an appraiser to assess the value of your house according to its features and condition compared to similar properties in your area.
Which Types of Remortgage Can You Apply for with a CCJ
The goal of standard remortgaging is to swap one mortgage for another that offers better interest and payment terms. Doing so enables you to reduce your interest rates and monthly payments and shorten the term of your mortgage.
You remortgage with the same lender or a different one. Remortgaging with the same lender is less complicated as they do not conduct new credit and affordability assessments. However, find a new lender whose terms and interest rates are more favourable than the current lender. The hassle of going through the mortgage application process and having potential lenders conduct hard enquiries of your credit report will be worth it.
Keep in mind that additional costs will beadditional costs will be associated with remortgaging with a new lender. For example, your current lender may impose exit charges or penalties for ending your mortgage contract. You may also include legal, valuation, and mortgage application fees.
Apart from remortgaging to access better repayment terms, some property owners with the goal of equity release. They leverage the equity in the property to access a larger loan. Therefore, repair the loan with the previous lender and cash out the extra amount in a lump sum, using the cashed out amount for debt consolidation, investment, savings, or home improvement. For most specialist lenders, your eligibility for the cash release remortgage depends on your home equity.
Although remortgaging to release equity is an attractive option if you need a lump sum amount of money, keep in mind that you end up borrowing more which can result in your monthly repayments going up. Furthermore, if a real estate market in your area declines, your property loses value,, and you may be left with negative equity.
What Are My Options if My Remortgage with CCJ Application Is Rejected?
Below are various options if your remortgage with CCJ application is declined.
- Apply to another lender. Different lenders have different eligibility criteria for a mortgage with CCJ. Therefore, although one lender may reject your application due to a high CCJ amount or because the CCJ is unsatisfied, another lender may be willing to consider your case and offer you a loan. A specialist bad credit mortgage broker can help you find a mortgage lender willing to lend to you. They’ll also help you with the application process to increase your chances of qualifying.
- Rectify the CCJ issues. If you find that no lender is willing to refinance your property due to your pending CCG issues, it is best to rectify those issues before attempting to reapply. If the CCJ is less than one year, wait at least one year before applying again. If you have difficulty keeping up with the monthly repayments, apply for a variation of the payment plan with the court to allow you to adjust your payments to an amount you can afford.
- Work on improving your credit score.
- Seek an unsecured loan.
Which Type of Lenders Offer Specialist 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. 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.
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 improve the chances of qualifying. They also know the most suitable specialist CCJ mortgage lenders and their eligibility criteria. Therefore, they can match you with a specialist lender that is likely to 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:
1. Review Your Credit Report
Check what is indicated about your CCJ by the three credit reference agencies regulated by the Financial Conduct Authority. It is vital to check all the three reports to ascertain that the CCJ information recorded is accurate. Besides, you do not know which credit agency your lender will refer to, and you need a point of reference.
2. 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 satisfy in your credit report. However, if that is not possible, negotiate a favourable repayment plan with the lender and pay your instalments on time.
3. Contact a Bad Credit Broker
They will help you to identify lenders suitable for you.
4. 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 provide to prove your affordability and creditworthiness.
Do I Have to Pay Off a CCJ before Applying for a Mortgage?
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 file. 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.
Besides, 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.
Contact us now if you need to remortgage but you have a CCJ