County Court Judgement (CCJ) could be a major barrier in home buyers’ Mortgage application process. If the applicants have more than one CCJs, it would be more difficult to apply for a mortgage. On a positive note, applicants would find the light at the end of the tunnel with the help of an experienced mortgage adviser.

As per mortgage industry research, the amount of Lenders offering mortgages to applicants with bad credit has gone up over the last decade. However, it is important to highlight that each lender has its own criteria for mortgages with bad credit.

Applying for a Mortgage With a CCJ is possible, applicants would require a planned approach. High-street banks are unlikely to accept mortgages with a CCJ. It opens up the opportunity for specialist lenders in the UK to target a niche market.

Lenders’ perspective on applying for a mortgage with CCJ

For applicants who are linked to CCJ, lenders would consider the below factors when assessing their mortgage application.

• The Date, CCJ was recorded
• The settlement status of the CCJ
• The amount of the CCJ
• The number of CCJs on applicants’ credit file
• The amount of mortgage deposit
• Whether an applicant is looking for residential or BTL mortgage
• Other related credit issues

When there is a CCJ, even standard residential mortgages become difficult. This is the common industry norm. Mortgage applicants should not give up with an expert on their side. The specialist CCJ mortgage advisers and credit issue experts would increase their chances of securing a mortgage in the UK.

When was your CCJ registered?

The most critical factor when it comes to applying for a mortgage with CCJ is the time when it was recorded. Lenders’ criteria depend on the time period the CCJ was recorded such as within the last six months, twelve months, 18 months, or before.

A CCJ recorded 24 months ago would not be relevant as a CCJ recorded two/three months ago. It doesn’t mean that applicants apply for a mortgage with recent CCJ. If the CCJ has been recorded recently, the choice of lenders would be limited and they might charge higher interest rates and higher product fees.

Have you settled the CCJ in full?

Mortgage providers in the UK have specific criteria for different scenarios. Similarly, when an applicant has a CCJ, it differs from one lender to another on how they treat the applicant. Some lenders would ask the applicants to settle the CCJ before applying for a mortgage. Other lenders would still allow the applicants to apply for a mortgage with an un-settled CCJ. The key benefit would be that applicants would get a cheaper rate from the lender if they have settled the CCJ in full.

In case if an applicant has not settled the CCJ and approached a lender who only considers settled CCJs, it would be waste of time and effort. Further, if the lender has run a credit check, it would further affect the chances of a new mortgage application with a suitable lender. Therefore, it is important that applicants speaking to an experienced CCJ specialist mortgage adviser as the first step.

The total value and the number of CCJs on applicants’ credit report

The value of the CCJ could also affect the specific requirements of the lender. If an applicant has a large CCJ balance, the lender would ask to contribute a higher deposit. In other words, the lender would cut down the maximum loan amount affordability.

On top of the capacity of the CCJ, the number of CCJs applicants have recorded against them would also impact the minimum deposit requirement. For example, if an applicant has more than one CCJ, then the applicant would require a minimum deposit of around 25%.

There could be a link between the duration and size of CCJ. If an applicant has multiple CCJs recorded over 12-18 months, the lenders would require a significant deposit to consider the mortgage. It indicates that both the time and capacity of the CCJ determine how lenders are considering the case.

Recently, lenders have introduced a new policy called ‘CCJ cap’. It is a threshold for a minimum number of CCJs that an applicant could have to be eligible for a mortgage. For example, if an applicant has three CCJs recorded within the past three years, certain lenders would decline the mortgage application. It doesn’t mean that all the lenders have a CCJ cap. There might be few other lenders who are still open for a higher number of CCJs.

How much deposit will I need if I have a CCJ?

Applicants would have more options in terms of the availability of lenders and cheaper rates if they have a higher deposit. When the applicants are contributing a large deposit, there is minimum risk available to the lender. On the other hand, if an applicant has a smaller deposit apart from a CCJ, lenders would perceive him as high risk and the options could be limited.

For example, if an applicant has a 5% deposit, then the CCJ would need to be older than three years. On the other hand, if the applicants have a 25% deposit, it would allow them to get a mortgage even if their CCJ was recorded within the last year. If the applicants could contribute a deposit larger than 25%, it would open up more options and flexibility.

Overall, applying for a mortgage with a CCJ could be challenging if the applicants don’t have proper advice and guidance from an expert. It is important to speak to a CCJ specialist mortgage adviser to successfully apply for a mortgage.

As a mortgage is secured against your home, it could be repossessed if you do not keep up with the mortgage repayments.

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