How to get a mortgage with a CCJ
Getting a mortgage with a CCJ (County Court Judgement) can be tricky, but it is possible. Don’t lose all hope. There are certain things you can do in order to increase your chances of getting a CCJ mortgage.
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3 steps to take if you have a CCJ
CCJs are issued for specific debts and indicate that you have failed to pay the debt or breached the terms of an agreement that was made between two parties. When the CCJ is registered, lenders will view it as a sign of financial instability and may be less likely to offer you a mortgage.
Speak to a specialist
It’s a good idea to speak to a specialist bad credit mortgage broker to research options outside of the mainstream lenders. It may also help if you have a large deposit saved up and/or can demonstrate that your income is enough to cover both the CCJ payments and any other outstanding debts.
Weigh up all your options
Another option could be applying for an adverse credit mortgage, which is designed specifically for borrowers with CCJs or other financial issues on their record, such as IVAs or debt management plans.
They typically feature higher interest rates than traditional mortgages and require larger deposits, but they provide an opportunity for those with CCJs to get back into homeownership in the long run.
Consider alternatives
Be aware that even if you manage to get approved for a CCJ mortgage or an adverse credit one, lenders might still impose restrictions on how much they’re willing to lend based on your CCJ amount and individual circumstances.
In some cases, these restrictions might mean that you need to find alternative financing such as family members or another type of loan in order to cover the remaining costs associated with buying a house or flat - so make sure you’ve got everything planned out before committing yourself.
What is the difference between a satisfied and unsatisfied CCJ?
A CCJ is a legal order by the court that requires an individual to pay back their debt.
The CCJ remains registered against the debtor's name until it is repaid in full. There are two types of CCJs: satisfied CCJs and unsatisfied CCJs.
What is a satisfied CCJ?
A satisfied CCJ occurs when the debt has been fully paid off according to the terms of the CCJ. When this happens, the CCJ will show as ‘satisfied’ on that person’s credit report and its negative effects will start to fade over time. The CCJ will remain on their credit report for six years, but lenders may be more willing to lend if they have a satisfied CCJ.
What is an unsatisfied CCJ?
An unsatisfied CCJ occurs when a debtor has failed to pay back their debt in full according to the terms of the CCJ, or has not kept up with payments as scheduled. Unsatisfied CCJs are listed on credit reports, and tend to be a red flag for lenders, who may be less likely to approve a loan or mortgage application from someone with an unsatisfied CCJ on their record.
How to increase your chances of approval
If you have a CCJ and are looking to get a mortgage, there are several things that you can do in order to increase your chances of getting approved.
1 - Satisfy any CCJs
Firstly, it’s important to make sure that your CCJ is satisfied, if possible, as this will reduce the negative impact on your credit history.
2 - Speak to a specialist
Secondly, speaking to CCJ specialist lenders or brokers could be beneficial, as they may be more open to approving someone with an adverse credit history.
3 - Save a deposit
Thirdly, having a large deposit saved up could help appease any potential lenders and demonstrate that you’re serious about taking out a mortgage.
4 - Research suitable schemes
Finally, researching government schemes designed specifically for CCJs might also give you access to better interest rates and reduced upfront costs associated with buying a property.
How much deposit will I need for a mortgage after a CCJ?
CCJ mortgages usually require a larger deposit than other mortgages, as lenders view CCJs as riskier investments.
The exact amount may vary depending on the individual lender and your overall financial situation, but it's generally advisable to aim for at least 25% of the property value as a deposit in order to increase your chances of approval.
Some CCJ specialist lenders may offer reduced deposits in certain circumstances. It's important to speak with an experienced mortgage advisor who can provide further advice based on your specific needs.
Which is worse, a CCJ or a default?
A CCJ is a County Court Judgement, while a default is an unresolved debt.
CCJs are typically the result of unpaid debts and can have a more serious impact on your credit score than defaults because they remain visible to lenders for six years.
On the other hand, defaults are less severe and will usually be removed from your credit report after six months if you make regular repayments towards them.
Ultimately, CCJs can be harder to overcome when it comes to getting a mortgage as they will remain visible for longer periods of time, while defaults are generally easier to manage with timely repayments and good financial practices.
However, both CCJs and defaults should be taken seriously and managed responsibly in order to improve your chances of being approved for a CCJ mortgage.
Does a CCJ affect how much I can borrow on a mortgage?
Yes, a CCJ can affect your mortgage affordability. It is important to understand how CCJs work and their impact on your credit score before seeking a CCJ mortgage.
A CCJ is a County Court Judgement and is typically the result of unpaid debts. This can detrimentally affect your credit score as CCJs remain visible to lenders for six years, reducing the amount of finance you may be offered or increasing the interest rate you are charged.
Overall, CCJs can be a major obstacle when it comes to getting a mortgage but they don’t have to be insurmountable. Taking the time to research CCJ specialist lenders or brokers and save up a large deposit will increase your chances of success. Do your due diligence when seeking CCJ mortgages and you could find yourself on the right path towards homeownership.
Reduced lending power
Aside from a CCJ’s impact on your credit score, having one may also reduce the amount of money you can borrow.
CCJs act as an additional financial burden that lenders must take into account when deciding whether to approve your mortgage application.
Even if your CCJ is satisfied, many banks and other lenders may still consider it an indication of risk and could therefore charge you higher rates for loans or mortgages than those with no CCJs on their record. This could make it difficult to afford the repayments for large loans such as mortgages, depending on the amount borrowed and type of mortgage sought.
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