If you have a bad credit history that includes one or more CCJs it can be difficult to secure a mortgage. In this article we explain what a CCJ is, how to improve your chance of getting a mortgage if you have one, as well as highlighting some of the best lenders who accept people with CCJs.
What is a CCJ?
A County Court Judgement (CCJ) is a court order filed against someone who has failed to repay an outstanding debt. It is typically a last resort for creditors, following a series of requests and demands for the money to be repaid. Once you have a CCJ registered against you, you have 30 days from the date of the judgment to pay the debt off in full, otherwise it will be entered on your credit record. CCJs stay on your credit record at the Register of Judgments, Orders and Fines for 6 years.
Having a CCJ will have a significant impact on your credit score with the main credit reference agencies, Experian, Equifax and TransUnion. This will make it more difficult to take out a loan, credit card and even to open a bank account. However, the detrimental effect it has will reduce over time and after 6 years the CCJ will be removed entirely.
Can I get a mortgage with a CCJ?
Although many mainstream lenders won't consider lending to someone with a CCJ, especially within the first 3 years after it has been filed, it is still possible to get a mortgage from a specialist lender or one who can accommodate borrowers with a poor credit history. Whether you can get a mortgage and the type of deal you can secure will depend on a number of factors:
How old is the CCJ?
As a rule of thumb, the older the CCJ, the more likely you are to get a better mortgage. A very limited number of lenders will accept applicants with a CCJ registered in the past year, while the chances of you getting accepted after three years have passed is significantly higher. After 6 years, the CCJ will no longer feature on your credit file, although you may still have to disclose it if a lender asks you about your long-term credit history.
Have you repaid the debt?
If you repay the debt in full within 30 days, the CCJ won't feature on your credit record at all. After that point, it will be marked as "satisfied" after it has been paid off. This will be looked on far more favourably by mortgage lenders than "unsatisfied" CCJs.
How many CCJs do you have?
As you would expect, the more CCJs you have, the more difficult it is going to be to get a mortgage. Typically, if you have had two or more CCJs in the past two years, you will only be offered a lower Loan to Value (LTV) product, meaning you will have to contribute a larger deposit.
How much was the CCJ for?
While some lenders don't specify the limit on the value of the CCJ they will accept, others set a clear cap of perhaps a few hundred or few thousand pounds. Again, a larger value CCJ can be balanced out by accepting a lower LTV product.
What problems are there with getting a mortgage with a CCJ?
When you are applying for a mortgage when you have poor credit, your application will be scrutinised and approved or rejected based on your individual circumstances. The lender will take into consideration the details of the CCJ, but also the records of the missed payments and defaults that led to it, as well as any other examples of mismanaged debt. This process takes longer than for a mainstream mortgage and so it is likely to take more time to get a response from the lender.
As mortgage applications with a CCJ are generally assessed on a case-by-case basis, it is worth using a good mortgage broker to help you identify lenders who are likely to give you a mortgage based on your situation. Moreover, often specialist lenders only accept customers through an intermediary, so it pays to use a broker to give you access to the widest range of products. We have vetted the service offered by online broker Habito* and it has an excellent customer service track record.
If you have a CCJ, you can expect:
- To be offered a lower LTV, meaning you have to have a larger deposit or more equity in your existing property if you are remortgaging
- To be subject to stricter affordability criteria, which may mean you won't be able to borrow as much or may have to borrow over a longer mortgage term
- To pay a higher APR
- To have less choice of mortgage products and lenders
How can I increase my chance of getting a mortgage with a CCJ?
Although it is more challenging to get a mortgage with a CCJ, there are a number of steps you can take to make it more likely you will secure a good deal:
- If you can afford to do so, pay off the CCJ debt in full as soon as possible. If you need to pay it off in instalments, ensure you are up to date with your payments.
- In addition to your CCJ debt, make sure you continue to service your other debts and credit agreements, making repayments on time and not exceeding your credit limits.
- If you are a first-time buyer, consider saving up a larger deposit so you can access a lower LTV mortgage product. This will make it more likely you will be approved for a mortgage deal and can also help you secure a lower APR, making it cheaper.
- If you can, delay your house purchase or move until a minimum of two years has passed since the CCJ was registered. Again, this will increase the number of lenders who will offer you a mortgage, as well as more competitive deals.
- Try to boost your credit score to counterbalance some of the negative effects of the CCJ. This could include minimising your applications for further credit products, using a service like LOQBOX* or Experian Boost, or simply making sure you are on the electoral roll. For more guidance, read our article "How to improve your credit score quickly".
Which lenders will give you a mortgage with a CCJ?
There are a number of specialist mortgage lenders that will accept applicants with CCJs, as well as some more mainstream providers who will also consider CCJs on a case-by-case basis. Below we list five of the best mortgage lenders for people with CCJs, based on their product range, their eligibility criteria for people with CCJs and the maximum LTV they offer.
|Mortgage lender||Eligibility criteria for people with CCJs||Maximum LTV|
|Cambridge Building Society||Eligible if CCJs less than £500 and have been satisfied over 24 months ago, If CCJs over £5,000 then must be discharged/satisfied over 36 months ago||Up to 70%|
|Kensington Mortgages||Unsatisfied CCJs accepted at underwriters' discretion, 36 months for Select range and 24 months for Core range||Up to 95%|
|Foundation Home Loans||Tier F1 products - no CCJs in 36 months, all must be satisfied at time of application, Tier F2 products - no CCJs in 24 months, 1 unsatisfied if older than 24 months and up to £200, no CCJs in 12 months, 1 unsatisfied if older than 12 months and up to £200||Up to 90%|
|Marsden Building Society||No CCJs within last 3 years, CCJs over 3 years old up to £2,500 at underwriters' discretion||Up to 80%|
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers - Habito, Loqbox