Getting a Mortgage with a CCJ

If you have a CCJ or multiple CCJs, you may be wondering what you need to do to get a mortgage. You may have already been declined by a lender, and the process can feel extremely frustrating.

CCJs are serious negative marks on your financial record and can have a lasting, damaging impact when trying to obtain finance. However, getting a mortgage with a CCJ is not impossible, and there are lenders who may still be willing to offer you a mortgage.

Read our guide on getting a mortgage with a CCJ to find out more.

What is a CCJ?

A CCJ is a County Court Judgement which has been issued against you. If you have defaulted on a debt and a creditor feels you are unwilling or unable to pay, they will apply to the court to obtain a formal legal judgement for the debt. Once a court has issued a CCJ, a lender has 6 years to commence enforcement action to recover the debt.

After 6 years, most financial accounts drop off your credit record and this can also be the case with CCJs. However, a creditor can continually reapply for a CCJ provided they have a valid legal reason to do so, meaning the CCJ can remain on your record for much longer.

A common reason creditors extend CCJs is if you move overseas and they are unable to enforce collection of the debt within the initial 6-year period. There are also other legitimate legal reasons why a judge may renew a CCJ.

Dealing with a CCJ

There are two ways to deal effectively with a CCJ.

The simplest way is to pay off the amount owed or contact your creditor to arrange a payment plan. Despite the CCJ being in place and allowing enforcement action to collect the amount in full, most creditors will be amenable to a payment plan because enforcement action can be costly.

The second way to deal with a CCJ is by using legal avenues. If the outstanding amount is outside of your financial ability to pay, you may wish to consider bankruptcy. However, bankruptcy should be treated as a last resort. For many mortgage lenders, bankruptcy is viewed far more negatively than a CCJ.

You can also apply to the court to have the judgement set aside, provided you act quickly after the CCJ has been issued and you have a clear legal argument showing the judgement was granted in error.

These legal arguments are narrow. For example, you cannot set aside a judgement simply because you moved address and did not receive it. However, you may be able to set aside a judgement if you can prove that you do not owe the money, or that the amount claimed in the CCJ is incorrect.

Can I Get a Mortgage with a CCJ?

Yes, there are a small group of lenders that will consider people with CCJs. They may even consider you if you have previously been declared bankrupt. These lenders are usually smaller specialist providers that you will not find on the high street, and they typically charge higher interest rates than standard mortgage products.

The increased interest rate allows the lender to offset the higher risk associated with lending to applicants with adverse credit. While you may fully intend to meet your mortgage obligations, other borrowers in this category may not.

As a result, lenders spread the risk across their mortgage book by applying a generally higher interest rate to these types of mortgages.

How Much Deposit Will I Need if I Have a CCJ?

The deposit required depends on the lender you approach. Some adverse credit lenders may insist on higher deposit amounts, while others could accept a standard 10% deposit.

To determine your specific deposit requirement, speak with your mortgage broker. They can advise you on how much you will need to contribute to qualify for the mortgage product.

Does the Size of the CCJ Affect My Mortgage Application?

A CCJ is considered a serious financial obligation, and if it is still outstanding at the time of your application, it can significantly limit your ability to borrow. Even adverse credit lenders typically expect CCJs to be paid before you apply for a mortgage.

The size of the CCJ may also be a factor for some lenders, even if it has been satisfied. It is advisable to consult a whole of market mortgage broker, such as Boon Brokers, to determine which lender is most suitable for your specific CCJ situation.

How Do I Rebuild My Credit Score After a CCJ?

Your first step is to pay off the CCJ. The sooner it is settled, the sooner it will drop from your credit record. If you are considering a mortgage while a CCJ is still outstanding, you will generally be better served using your deposit to clear the CCJ rather than trying to secure a mortgage with the debt still owed.

Once paid, you can begin repairing your credit score by reducing other existing debts, making all monthly payments on time, and avoiding taking on additional credit. Each payment made and each debt fully repaid will positively impact your score.

Depending on the extent of the damage to your credit file, the repair process may be slow, with only marginal improvements initially. However, with consistent financial management over a few years, your credit score can improve significantly.

Finally, note that your credit score won’t reach its full potential until the CCJ has fully expired from your record. CCJs are typically removed 6 years after the registration date unless the creditor successfully reinstates the CCJ through the courts.

Can I Get a Mortgage with Further Credit Problems?

Having further credit issues after a CCJ does not automatically prevent you from getting a mortgage, but it may reduce your chances compared to someone with a clean credit history.

To explore your options, it’s important to discuss your full financial situation with a mortgage broker. Brokers are experienced in dealing with all types of credit histories, and being transparent about previous financial difficulties will help them find the best solution for you.

If you want unbiased mortgage advice, Boon Brokers offers free, no-obligation guidance. We will identify the mortgage products most suitable for your situation. Fill out our contact form today to discuss your options.