Purchasing a home is a significant and exciting life milestone, but it can be daunting, especially if you fall into the category of having a bad credit mortgage, in particular, a CCJ (County Court Judgement). It’s understandable to feel overwhelmed about the process of obtaining a mortgage with a CCJ and while it can create obstacles in your journey, it is not impossible.
Let’s investigate how you can fulfil your home owning dream with a CCJ.
What is a CCJ?
In short, a County Court Judgement is an order stating that you owe money to someone and can happen for several reasons, including failing to pay an invoice or bill, falling behind with utility bills, ignoring letters or phone calls from the person you’re indebted to, failing to stick to an agreed repayment plan or missing credit card, mortgage, loan, or other debt repayments.
If you fail to respond to the letter informing you of the money you owe, by the stated date, the court will make a CCJ without a hearing, which is called a default judgement. A notice of enforcement is then issued by the court stating how much you owe, when you need to pay it and how many years the debt will be enforceable. The company or person you owe money to can force payment from you in several ways including, regularly taking money from your wages, or bank account and asking bailiffs to seize and sell your possessions.
Can You Get a Mortgage with a CCJ?
When it comes to getting a mortgage with a CCJ there are several factors that lenders will consider when assessing your CCJ(s)-
- Time passed since the CCJ was issued- the greater the amount of time passed since the date of issue, the better your chances of being approved.
- The total value of the CCJ- how much you owe on your CCJ can play a role in how much of a deposit you will need to put down, the larger the value of your CCJ usually means the larger the deposit you will need.
- The number of CCJs you have- in most cases, lenders will not consider applicants with more than 2 CCJs registered in the last 2 years. There are some lenders that will consider more but will usually require you to provide a larger deposit.
- If your CCJ has been settled- some lenders will prefer your CCJ to be settled and some may require a payoff before considering your mortgage application. Others may only require the CCJ to be at least 2 years old.
In short, having a paid CCJ is far more favourable to lenders than an unpaid one. It shows your capability of meeting your financial obligations. Having a CCJ that is unpaid is more difficult as it could show that you are struggling with financial responsibilities.
What are the Impacts of a CCJ?
A CCJ is recorded on your credit file for 6 years, which can make it difficult when it comes to borrowing money as it can negatively impact your creditworthiness, making it harder to secure a mortgage. When applying for mortgages, lenders will check your credit history to assess the risk of lending to you and while you can agree, a CCJ is a messy business, it doesn't mean you're automatically disqualified from obtaining a mortgage. There are steps you can take to improve your chances:
- Understand your credit report- use trusted sites like Experian to obtain a copy of your credit report and review it carefully, ensuring all information is accurate and up to date. If there are errors, it is vitally important you correct them or provide information as to why they are incorrect for the lender to clearly see.
- Build a positive credit history- try to make consistent and timely payments on all your existing debts and bills as this will demonstrate to your lender that you improved your financial responsibility and gradually rebuild your credit score.
- Save for a larger deposit- having a substantial deposit reduces the lender’s risk of lending money to you and may offset the impact of your CCJ.
- Seek specialist mortgage advice from a bad credit mortgage broker- approaching a bad credit mortgage broker, like TaylorMade, can provide expert advice and guidance and assess your situation, to connect you with lenders who are more open to considering applicants with CCJs.
- Demonstrate stable employment and income- reassuring your lender that you are responsible with your income and that your employment is stable is a must. Lenders typically look for a minimum of 3 to 6 months’ worth of payslips or bank statements as proof of income.
Is it possible to get a CCJ Removed from Your Credit File?
Even if you’re able to repay your CCJ sooner, it will still show on your credit file for 6 years, however, ways you can get them removed more quickly are; by paying the CCJ in full within 30 days of issue and successfully disputing the CCJ and gaining court agreement.
Applying for a Mortgage with a CCJ.
It’s obvious that getting a mortgage with a CCJ is more difficult than without, but hopefully, this article has shown that it is still possible with some hard work and sensible financial decisions. Preparing a detailed explanation regarding your CCJ, highlighting any extenuating circumstances that led to the judgement and providing evidence of how you have taken steps to rectify the situation since then can help. Showing responsibility and transparency can make a positive impression on lenders.
Types of Mortgages and How they are Impacted by a CCJ.
The type of mortgage you are applying for will be impacted differently by your CCJ, there are some types of mortgages that may be easier to apply for than traditional mortgages.
Shared OwnershipA shared ownership mortgage is available to those with a CCJ and will require a lower deposit than a traditional mortgage, due to only taking a loan for a portion of the property’s value. If approved, you should be able to purchase between 25% and 75% of the property and only pay a mortgage on this part. The rest will be owned by a housing association requiring rent to be paid to them for the portion that they own.
Guarantor MortgageUnfortunately, guarantor mortgages aren’t available anymore, but they used to be a way of securing finance with a CCJ using a guarantor who agrees to cover your mortgage payments if you can't make them. Speaking to a specialist bad credit mortgage broker can help with other options that are now available.
Joint MortgageIt is still possible to apply for a joint mortgage with another person if you have a CCJ, it is important to bear in mind that your CCJ will affect the overall outcome of what you are able to borrow together.
Consider a Specialist Bad Credit Mortgage Broker.
A specialist bad credit mortgage broker like our team at TaylorMade is more understanding of your circumstances and we consider your recent financial behaviour rather than focusing solely on your CCJ. We are Manchester’s leading mortgage brokers who can provide personalised mortgage solutions to meet your requirements and while a CCJ provides challenges when it comes to seeking a mortgage, our bad credit mortgage broker team at TaylorMade can help you on your way to homeownership.
If you are struggling with navigating your CCJ and gaining a mortgage, then come and chat with us to see what possibilities could be available to you.
