It's a common misconception that you need to have a completely clean credit history in order to get a mortgage. In fact, many lenders are happy to work with borrowers who have adverse credit - including those who have CCJs (County Court Judgements) on their record. However, there are a few things you should know before you apply for a mortgage with a CCJ. We've put together a guide to help you understand how CCJs affect your mortgage application and what you can do to improve your chances of being approved.

What Is a CCJ and How Does It Affect My Mortgage Application?

A CCJ is a legal ruling that is made against an individual who has failed to repay debt. This can happen for a variety of reasons - including falling behind on credit card payments, defaulting on a loan, or not paying rent. A CCJ will remain on your credit file for 6 years and can make it more difficult to obtain credit during that time. This is because lenders view CCJs as a sign that you may struggle to repay the money you borrow.

However, it's important to remember that each lender has its own criteria for mortgage approval. This means that some lenders may be more willing to work with borrowers who have CCJs than others. If you're considering applying for a mortgage with a CCJ, it's worth shopping around to compare different lenders' policies. The best way to do this is to go through an independent, specialist mortgage broker such as John Charcol. As we have access to the whole market, we can help you find a mortgage that is suited to your individual circumstances.

What Is a CCJ Mortgage?

There's no such product as a CCJ mortgage. It's simply a term that is used to describe a mortgage that can be taken out by somebody who has a CCJ on their credit file. The process for getting a mortgage with a CCJ isn’t really any different from getting a normal mortgage, you’ll just find that the pool of lenders and deals to choose from may be restricted. To give yourself the best chance at securing a great deal, you’ll want to use a mortgage broker like John Charcol.

Should I Pay Off My CCJs Before Applying for a Mortgage?

It is possible to get a mortgage with an unsatisfied CCJ, but the lenders and products available to you will be limited.  You’ll have a better chance of securing a mortgage if you pay off your CCJs before applying and you’ll have access to better deals.

If your credit score has been affected by CCJs, then it’s also a good idea to focus on improving your credit score overall.

How Will Paying My CCJs Affect My Mortgage Application?

Usually, CCJs remain on your credit file for 6 years, no matter what you do. This means that if you have a CCJ, it's likely to have some impact on your ability to get a mortgage - although the extent of this will depend on individual lender's policies. Furthermore, the longer ago your CCJ was registered, the less impact it should have on the deals and rates available to you.

However, it’s important to bear in mind that some standard lenders will still refuse to consider your application even if the CCJ was closer to 6 years ago and is satisfied, while other specialist lenders will be happy to consider you even if your CCJ was more recent and is still unsatisfied.

What works for you will be down to your situation and the lender’s criteria.

Satisfied CCJs

Satisfied CCJs refer to CCJs that you have paid in full and on time. Once a CCJ has been satisfied, it will be marked as such on your credit file. This is beneficial, as satisfied CCJs are often looked upon more favourably than unsatisfied CCJs since they show you have made an effort to repay what you owe. This is reflected in the fact that some lenders will only consider your mortgage application if your CCJ is satisfied. It’s important to note that a CCJ, satisfied or not, will remain on your credit file for 6 years.

Unsatisfied CCJs

An unsatisfied CCJ is one that you have not paid in full. Lenders will take this into account when assessing your mortgage application and you may find it more difficult to get approved as a result. It’s highly likely that you’ll require an adverse credit lender if you have any unsatisfied CCJs on your credit file.

What Factors Will Lenders Consider When Assessing My Mortgage Application?

Alongside details such as the date of your CCJ and whether it's satisfied, lenders will also consider other factors.

The Nature of the CCJ

Lenders will consider the nature of your CCJ when assessing your mortgage application. In particular, they will want to know the amount and what type of debt it relates to. CCJs for larger amounts of money or for essential payments are likely to be looked on less favourably than smaller debts, such as credit card debts or missed payments on a phone bill.

The Number of CCJs

Multiple CCJs are likely to have a bigger impact on your ability to get a mortgage than a single CCJ. If you've only had one CCJ in the past 6 years, it will be easier to get a mortgage than if you have accumulated multiple CCJs in the past couple of years. This is because it shows that you have a history of defaulting on payments and you'll be perceived as a high risk borrower.

Whether There's a Dispute

If you're in the process of disputing a CCJ, this is usually noted on your credit file and lenders will be able to see this. While most lenders will still take the CCJ into account, some may be more willing to approve your loan if there is a dispute - particularly if you can prove that the debt is not yours, or that you have already paid it off.

Your Credit History

As well as taking CCJs into account, lenders will also look at your overall credit history when assessing your mortgage application. This means considering factors such as whether you've missed any payments in the past and have any other outstanding debts. If you have a good credit history other than your CCJ, this will put you in a better position for approval.

Your Current Financial Situation

When assessing your mortgage application, lenders will also take into account your current financial situation. This includes factors such as your income, current debts and credit score. If you have a good income and a low level of debt, you're more likely to be approved for a mortgage than if you have a bad credit score and high levels of debt.

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How Will a CCJ Affect the Offer I Get?

If you have a CCJ on your credit file, it's likely to have some impact on the mortgage offer you receive. In particular, you may find that your interest rate is higher than average and that you're offered a lower LTV than you originally applied for. Additionally, the terms of your mortgage may be less favourable than those offered to people without CCJs. While the presence of a CCJ is likely to have some impact on the mortgage offer you receive, it's important to remember that this will vary from lender to lender. Some specialist lenders are more willing to lend to people with CCJs than others, and as such, you may still be able to get a competitive mortgage offer. Speaking to a mortgage broker like John Charcol is the easiest way to ensure you get the best deal for your situation.

How Long Does a Default Stay on My Credit File?

If you're looking to pay off CCJs for mortgage purposes, there are 2 main options available:

  • Option 1 - full and final settlement: this involves making a lump sum payment to your creditor in order to settle the debt in full. Once this has been done, the CCJ will be marked as satisfied on your credit file
  • Option 2 - instalment plan: this involves making regular payments to your creditor over an agreed period of time. Once the debt has been repaid in full, the CCJ will be marked as satisfied on your credit file

It's important to note that, while either of these options can help improve your chances of getting a mortgage, it's generally preferable to repay the debt in full if possible. This is because doing so will result in the CCJ being marked as satisfied sooner. If you're still paying your instalment when applying for a mortgage, it may lower your affordability.

Can I Get a Mortgage with a High Street Lender After Having a CCJ?

While it's possible to get a mortgage with a high street lender after having a CCJ, it's largely dependent on the severity of your situation. For example, if you have a CCJ for a large amount of money, or have multiple or recent CCJs, it's unlikely that you'll be approved for a mortgage with a high street lender. High street lenders generally have stricter criteria for mortgages and are less likely to lend to people with CCJs on their credit file. It's important to get professional advice from an independent, specialist mortgage broker like John Charcol before applying for a mortgage, as we’ll be able to assess your situation and advise you on the best course of action.

What if I've Had More Adverse Credit?

If you have additional adverse credit, such as defaults or bankruptcy, you'll find it more difficult to get a mortgage. A specialist lender will be required and the interest rate you're offered will often be higher than average. The lender may also require a bigger deposit. Ultimately, it's always best to try and settle defaults and avoid further adverse credit before applying for a mortgage. You should also work on improving your credit score overall.

How Can I Improve My Chances of Being Approved for a Mortgage After a CCJ?

There are a few things you can do to improve your chances of being approved for a CCJ mortgage:

  • Repay the debt in full: this is the best way to improve your chances of being approved for a mortgage. It will result in the CCJ being marked as satisfied, making it more likely you'll secure a mortgage sooner with a better rate. Choosing to settle CCJs for mortgage purposes can only have a positive impact on your application
  • Improve your credit score: a CCJ will undoubtedly contribute to a poor credit score. But, if you show that you have made an effort to rebuild your credit rating since, this will put you in a better position when applying for a mortgage. Make all your repayments on time, join the electoral roll and keep your credit usage low
  • Avoid taking on more debt: lenders assess your affordability when considering your mortgage application. If you have other debts, such as credit cards or overdrafts, this may make it more difficult to get a mortgage
  • Save up for a larger deposit: a larger deposit will improve your chances of being approved for a mortgage, as it reduces the amount you need to borrow. It will also give you access to better mortgage rates
  • Make all future payments on time: it's important to show that you're capable of making timely payments on your debts. This will help rebuild your credit score from bad credit, making it more likely that you'll be approved for a mortgage
  • Consider using a specialist lender: some bad credit lenders are more willing to consider applications from people with CCJs than others. If you're struggling to get approved for a mortgage, it may be worth considering a specialist adverse credit lender. Most specialist lenders only work through intermediaries like John Charcol, so approach a broker if you think you’ll need this kind of provider.

Get in Touch

At John Charcol, we've helped many people with CCJs get mortgage offers — both from high street lenders and specialist lenders. We'll assess your situation and advise you on the best way to move forward, helping you to get the mortgage offer you deserve. Contact us today on 0330 433 2927 to find out more about how we can help you.

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