Author: Kristian Derrick

Can you get a mortgage with a CCJ? If you have blemishes on your credit record, you may be worried that you are ineligible for a mortgage.

You may be reluctant to approach lenders or apply for mortgages in case you are refused and your credit rating is further affected.

The truth is, that ‘black marks’ on your credit history do not automatically rule you out of getting a mortgage.

There are a number of niche lenders that specialise in providing mortgages to those with defaults or CCJs.

These lenders will consider the severity, the duration, and how historical the credit issues are, then determine how closely you meet their other eligibility requirements.

In this article, we will explain the best way to secure a mortgage if you have CCJs or defaults on your credit file.

Getting a Mortgage with CCJs

As a result of having bad credit, many people are refused a mortgage.

However, a mortgage broker can help you find lenders who are more likely than traditional lenders to accept your application.

It will take time to assess your particular circumstances and lenders may have additional criteria, in this guide, we will cover some of the major points to help you understand how it is still quite possible to secure a mortgage with a CCJ.

What is a CCJ?

A CCJ, otherwise known as a County Court Judgement, is issued if you fail to pay a debt that you owe.

Having one of more CCJs on your credit file may affect your mortgage choices, but it certainly doesn’t rule out lending altogether -you may need to look for a bad credit mortgage lender.

Whilst, many mainstream lenders will refuse to offer a mortgage to those with an open CCJ or ones that have been issued in the past 3 years, there are lenders that will take them into consideration.

Although it may be more difficult and more complicated than securing a mainstream mortgage, it is possible to secure a mortgage with CCJs through a speciality lender.

In these cases, your mortgage application is likely to be declined by many lenders, but it is still possible to secure a mortgage with a poor credit rating.

Can I get a mortgage with CCJs?

There a number of factors regarding your CCJ(s) that mortgage lenders will take into account, including:

• The Date of the CCJ – The most important factor is when the CCJ was registered. The longer the date that the CCJ was issued, the better the chances of securing a mortgage. The date the CCJ has been resolved is also important, with many lenders requiring CCJs to be settled for 12 months or more before agreeing to a mortgage. However, there may be a few lenders that don’t require CCJs to be resolved at all.

• Number of CCJs – A specialist bad credit mortgage lender will typically limit the number of CCJs registered in the last two years to 2, with minimal restrictions for those registered longer than 24 months ago. The larger the deposit you have, the more CCJs your lender is likely to accept, as long as they were issued over 12 months ago.

• Amount of CCJ – The amount of the CCJ is important as it often determines the amount of deposit you will need to put down. If your CCJ was issued over 2 or 3 years ago, the amount of the CCJ will have little effect on your mortgage, however, if it is less than 2 years old, size does matter. For example, a CCJ over 12 months old that is £2,500, would probably require a 15% deposit. If the CCJ is less than 12 months old, it is limited to £1,000. Generally speaking, the larger the deposit you have, the larger the amount of CCJ your lender will accept. For a large CCJ, expect to require a deposit of between 25 and 35%.

• Satisfied or Unsatisfied CCJ – Speciality lenders will vary on whether they accept lenders with unsatisfied or satisfied CCJs, but you will have access to a larger choice of lenders if your CCJ is resolved. If your CCJ is unsatisfied, some lenders may require you to pay it off before applying for a mortgage, while others will allow you to apply as long as the CCJ is over 2 years old. Lenders that accept satisfied CCJs may require it to be paid off for over 12 months before accepting your application.

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Getting a Mortgage with a CCJ is not the only thing your lender will consider.

They will also have eligibility requirements that you will need to meet to improve your chances of successfully applying for a mortgage.

They are:

• Deposit – The bigger the deposit you have, the better. If you only have 5% to put down, then your CCJs will need to be older than 3 years at least. If you have a 25% or more as a deposit, then you could still be eligible for a mortgage with CCJ issued in the last 12 months. In fact, most lenders will require a large deposit for bad credit mortgages.

• Mortgage Type – Standard mortgages (fixed rate, variable, tracker, etc.) and remortgages will have the most flexible eligibility criteria when it comes to CCJs. Things may get a little more complicated for first-time buyers, with some providers only accepting lenders with CCJs under £1,000. Buy to Let mortgages may be a little more difficult, often having further restrictions put in place. You may be required to put up a larger deposit or meet a minimum age requirement.

• Affordability – More recent CCJs may restrict your lending. Your employment may also be a factor. For example, lenders may impose further restrictions if are self-employed with less than two years of accounts.
• Additional Credit Issues – Other credit problems on your file may also affect your likelihood of being accepted for a mortgage. Issues such as late payments are considered less serious and tend to be acceptable in the previous 2 years, as long as they don’t stretch to more than 3 months late. More severe credit problems, such as bankruptcy, repossessions, IVA, or being in a debt management plan, along with CCJs, may make is much more difficult to find a willing mortgage provider. Missed mortgage payments are more serious.

Read our full guide on applying for a mortgage after an IVA.

Can I get a mortgage with a satisfied CCJ?

Fortunately getting a mortgage with a CCJ or defaults is possible and your options will be more abundant if you have a satisfied CCJ.

If you have an unsatisfied CCJ, many lenders require you to pay it off before applying for a new mortgage, yet there are still lenders available who do offer mortgages to those with unsatisfied CCJs and defaults.

When do CCJs Expire?

County Court Judgments (CCJs) stay on the Register of Judgements, Orders and Fines for 6 years in total. They also stay for the same amount of time on your credit report/file.

Thankfully, a CCJ will not stay on your file permanently and will be removed at the end of the 6 year period.

Even better, you do not need to wait to apply for a remortgage and you may have the opportunity to secure one, even with a CCJ against you.

And remember, if you pay your debt off in full within one month of the judgement being issue you won’t have the CCJ recorded.

In these cases, you will be recorded as “satisfied” in the register, allowing potential lenders to see you cleared your debts.

Looking for a commercial mortgage with bad credit? You may be interested in the possibility of shared ownership.

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How Do I Know if I have a CCJ?

Have you ever been refused a loan or credit in the past?

There are many potential reasons for this, one of them being if you have had a CCJ placed against your name.

You can check if you have A CCJ by accessing the Register of Judgements, Orders and Fines.

There is a small fee to do this, so the alternative and often free method is to ask the credit reference agency.

Often people ask the question “how do I know if I have a CCJ?” and this can be a result of various different reasons.

For example, a debt that you felt wasn’t communicated effectively to you or maybe even misplaced paperwork, that means you were not aware.

It’s common for the courts to mail you the details of a CCJ against you, but if you are still unsure, you can always access the Register of Judgements, Orders and Fines to find out and put your mind at rest.

Can I Get a Mortgage with a CCJ?

Regardless of your credit score and whether it has a CCJ recorded, getting a mortgage with a CJJ is just like any other applicants and an affordability assessment will be completed on you.

This is to determine the mortgage rate amount and the interest rate you will be offered.

If you have a CCJ on your credit report, this might result in you being assessed in a different way.

Typically, those with a CCJ will not be able to borrow as much as those with a clean credit file and the associated costs will be higher e.g. interest and admin fees. This is even more applicable to those with unpaid or recent CCJs.

It is not all bad news though. You could still get a great mortgage deal with or without a CCJ. Mortgageable can help find you and compare mortgages for CCJs and defaults with our network of lenders.

Thankfully, there are still mortgage lenders that accept CCJs.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

Getting a Mortgage with Defaults

You can still get a mortgage with defaults on your credit file.

A specialist lender may be able to find you a deal that fits your circumstances, as long as you match their criteria in other areas, such as income, affordability, and other credit issues.

Types of Mortgage Defaults on Credit File

Late Payments, Missed Payments, and Defaults

A late payment is when a bill is paid after the due date; a missed payment is when the bill is not paid; a default is marked on your credit file when there have been several missed payments.

You are usually issued with written notice of default and given a deadline to respond.

The creditor can then close your account and request payment in full, with the default staying on your credit file for six years.

You should be aware that late payments will also appear on your credit history for up to 6 years, but are marked differently (with a number next to it representing how many months late it is), and are often ignored by lenders if they occurred more than 2 years ago.

Missed payments also appear on your credit history, and along with defaults, they are considered the more serious credit issues.

Lenders will consider how long it took to repay the debt or how much is owed.

The more historical the missed or default payments, the better your chances of getting a mortgage with a history of defaults.

Want a mortgage for a rental property? They work slightly differently to regular residential mortgages, learn all about them in our buy to let mortgages with bad credit.

Secured Loans and Unsecured Loans

In the world of defaults, there are two types of loan: secured loans and unsecured loans.

A secured loan is one that is linked to an asset, such as a house i.e. mortgage payments.

An unsecured loan includes the likes of utility and phone bills, and credit card payments, car loans not linked to an asset.

Missed payments and defaults to unsecured loans are considered to be much less serious than those on secured loans.

A few missed payments on unsecured loans over the last 6 years is unlikely to affect a mortgage application.

If you have more missed payments than that, you may be expected to put down a larger deposit or be offered a deal with a higher interest rate.

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Defaults on Mortgage Payments

The most severe kind of missed payment in the eyes of lenders is a missed mortgage payment.

A single late payment made over 2 years ago may be acceptable to some lenders, but to secure a new mortgage, you really need to be up to date in your current one.

Even specialist poor credit lenders will find it difficult to lend to those in mortgage arrears.

Recent Missed Payments

The more recent the missed payment the worse it looks to lenders.

Defaults in the last 12 months will seriously affect your chances of getting a mortgage, particularly if you have a small deposit.

To increase your chances of securing a mortgage with a good rate, raise as much of a deposit as possible.

CCJ Mortage Options

If you are still unsure about your options or have a question we haven’t managed to answer in this guide, feel free to contact us today for a free, no-obligation discussion.

Call us today on 01925 906210 or email us. One of our advisors can talk through all of your options with you.

Having a poor credit rating doesn’t mean you can’t get a mortgage and you’ll never own property. You may even be afraid to approach lenders for a mortgage in case you get turned down and your credit rating taking another potential hit.

Furthermore, it can be difficult to know if your credit rating is bad, as different banks and lenders will have varied opinions on credit based on your history.

If you’re wondering how to get a mortgage with a bad credit rating, read on to find out everything you need to know about bad credit mortgages.

Is It Possible to Get a Mortgage with a Bad Credit History?

The short answer is yes. If your credit does fall into this ‘bad’ estimation, that doesn’t mean that you can’t get a mortgage.

It may be more difficult than if your credit was better, but there are specialist lenders out there that offer bad credit mortgages, giving you a chance to get on the property ladder.

Rather than look at the blemishes on your credit history, these lenders will look at the duration and severity of the issues, as well as how close you are to meet their eligibility requirements.

Specialist bad credit mortgage lenders are more flexible with their lending, compared to their mainstream counterparts.

With specialist lenders, your bad credit history or poor credit score may not necessarily stand in your way of getting a mortgage, providing mortgages to those with:

• Missed mortgage payments or other late payments.
• A poor credit score or no credit history.
• Defaults in payments.
• Bankruptcy or repossessions.
• CCJs and IVAs.
• Debt management schemes or payday loans.
• Multiple credit issues.

In terms of severity, bankruptcy and repossession are considered the most serious, whilst the likes of missed mobile phone payments are on the other end of the scale.

Are you wondering “Why your mortgage application was declined?“, read on to find out how you may be able to avoid that in the future.

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What Issues are Taken into Consideration for a Bad Credit Mortgage?

When you have poor credit or no credit history, other factors will be taken into consideration to determine whether you can actually afford a mortgage and the monthly repayments.

Firstly, your employment status and income will need to be disclosed to your lender.

The lump sum you have available for a deposit is also of great interest to a specialist bad credit mortgage agency.

For a conventional mortgage on a residential property, the usual sum required for a deposit is at least 5% of the property’s value, but it may be more depending on circumstances.

For a buy to let home the deposit can be as high as 25%.

If you have bad credit, the ability to put down a larger deposit than the traditional mortgage lenders expect may lower your perceived risk of not being able to pay off the loan.

Regular outgoings will be also taken into account – such as dependent children, other loans, credit cards etc. – and the proportion of your income they take up.

This will help to determine how much money you will be able to borrow based on the monthly payments you can comfortably make.

Also, the type of property is of interest, particularly those with specialist features and non-standard construction.

If the home you’re interested in has the likes of a timber frame, thatched or grass roof, etc. you may need to go through a specialist lender.

How do I Get a Bad Credit Mortgage?

It is important to note that specialist lenders will put conditions in place that are different from mainstream lenders.

You are likely to need a larger deposit than those required for a conventional mortgage, with specialist lenders having stringent caps on the amount of money they are willing to lend those with bad credit.

The majority of bad credit mortgage lenders may loan 60% of the property’s value, however, a few may be willing to lend as much as 90%.

Additionally, you can expect a poor credit mortgage to have interest rates that are significantly higher than those from high street banks.

However, there will also be potential marked effects on your credit rating if you keep up with the payments.

Over time your credit rating may improve, which could give you the option to remortgage with better interest rates in the future.

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Preparing for your Bad Credit Mortgage Application

It is important to know what your actual credit rating is before applying for a mortgage so contact one of the main credit rating agencies Experian or Equifax for an accurate credit report.

It is imperative that the information supplied is current and correct, so double-check everything before submitting.

There are several online services that will provide you with a credit report for free online, or there are paid online subscription services so you can monitor your credit rating.

Additional documentation that you will require for your mortgage application includes the likes of:

• A current driving license or passport to verify your identity.
• Bank statements for your current account dating back between 3 to 6 months.
• Payslips from the last 3 to 6 months or if you are self-employed, your accounts and tax return forms (SA302) for the previous 3 years.
• Utility bills.
• Council Tax bill.
• Insurance policies.
• Proof of any benefits you receive.
• Your general living cost, such as travel expenses, childcare, regular outgoings etc.
• Details of the property you wish to purchase, the estate agent you are buying through, and your solicitor.

Each specialist lender may have different criteria when it comes to what information you require and your income and outgoings.

So, before applying, get in touch with our expert team here at Mortgageable to see if there’s anything else needed for your application.

Be sure not to make multiple online or mainstream bank applications as rejections can negatively affect your credit rating further.

Having several ‘hard’ searches on your credit file can adversely affect your chances of getting a mortgage when you find the right lender.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

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What About My Income?

Your income will usually determine the cap on the amount you are eligible to borrow.

Most mortgage providers will allow borrowing up to four times your annual salary, although some may offer up to 5 or 6 times your salary if the circumstances are right.

Affordability is key and lenders us affordability calculators to assess lending levels.

If your credit is bad, but you are a high earner you will still be considered a high risk for a mortgage that is a high multiple of your wage.

It may be possible through an expert mortgage broker, who can find you a flexible lender that specialises in bad credit mortgages to high earners.

Start your search for a mortgage by getting some advice from a whole-of-market mortgage broker and determine what your best options are depending on your income and how much you would like to borrow.

If you have a bad credit rating and a low income it may be a little harder to secure a mortgage as they are definitely not common, falling into the niche category of lenders.

Still, this doesn’t mean you won’t be able to get a mortgage – there may be a lender out there that specialises in lending to those with poor credit and a low income.

There are other options available if you fall into both categories, such as supplementing your low income with benefits, Shared Ownership schemes, and guarantor mortgages.

Get in touch with us today to talk through your options with you and advise you on the best route to go down.

Bad Credit Mortgage Lenders Main Takeaways

• Yes, those with a poor credit history can still get a mortgage.
• Raise as large as a deposit as you can as this will improve your chances of getting a mortgage.
• Check your credit reports and improve your credit rating as much as possible before applying.
• Find a lender that specialises in bad credit mortgages – that’s where Mortgageable come in!
• Speak to our export mortgage advisors today to discuss through your options.

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You’ll usually pay higher interest rates on unsecured borrowing than secured borrowing.

So if you’re stuck paying high levels of interest on your debts, it could be worth looking into a debt consolidation mortgage. 

What is a debt consolidation mortgage?

Are you struggling to make ends meet each month?

If your debt just doesn’t seem to be decreasing, it’s probably because the payments you’re making are just covering your interest payments, and not the debt itself.

In some cases, it can take years to pay off a credit card if you’re only able to make the minimum monthly repayments.

A remortgage for debt consolidation allows you to take out a mortgage large enough to pay off an existing mortgage, while also covering all of your existing debts.

How does it work? 

In order to qualify for a re-mortgage, the lender will take into account the following:

• Your credit report and any current debts you hold.
• The value of your property.
• How much of the property you own.
• The amount you want to borrow vs your income.

Typically, lenders will also request you to agree and sign an undertaking drawn up by a solicitor before approving the remortgage.

An undertaking is an agreement that you will repay the debts in full upon the release of the funds, however, if your income is sufficient to make the repayments itself, then this won’t usually be necessary.

Note: If your current mortgage interest rate is highly competitive and you do not want to lose it, then a remortgage may not be the best option for you and you may also want to consider a second charge loan.

Why would you consolidate your debts into a mortgage? 

By consolidating your unsecured debt next time you remortgage, you can quickly reduce your monthly outgoings and comfortably pay back what you owe in a realistic time frame.

The main benefit of a debt consolidation mortgage is a dramatic decrease in interest rates.

The other benefit is streamlining your payments into one monthly instalment, so there’s no need to worry about numerous payments over the course of the month. 

And there’s no need to worry about receiving a CCJ or IVA in the future. 

With a debt consolidation mortgage, you could pay off the following types of unsecured debts:

• Credit cards.
• Personal loans.
• Payday loans.
• Overdrafts.

Remortgage your debt here

Is a debt consolidation mortgage a good idea?

For many individuals, a debt consolidation mortgage can certainly be a good idea, but it should be something that is considered with care.

Even though consolidating multiple debts is attractive as it can convert your debts into a single instalment and reduce your rate of interest, there are some key things to be aware of and so you should always seek professional advice first:

• There may be cheaper alternatives than a remortgage, such as balance transfer credit cards.
• Transferring unsecured debts into a secured debt against your home means that your property acts as collateral and so is at risk if you fail to keep up with repayments.
• Although the interest rates on a mortgage can be lower, they are usually much longer, so you may end up paying more. By adding other debts onto your mortgage, you may end up paying interest on them for a longer period of time.

How much can you borrow? 

The amount you can borrow will be dependent on the amount of equity in your home, current debts, credit history, as well as whether or not you meet the lenders affordability criteria.

Your debt-to-income ratio may also be taken into account, though each lender will allow you to borrow in line with the specified limits.

For example, some lenders may allow you to borrow as much as 90% of the loan-to-value (LTV) ratio for properties exceeding a valuation of £500,000 and over, while others may only allow you to borrow a specified amount e.g. £20,000.

Other lenders may be more focused on how your original debts were gathered in the past and base their decision on a case by case basis, rather than your debt-to-income ratio.

Remortgage your debt here

Debt consolidation vs. Second Mortgage 

The main distinction between a debt consolidation mortgage and second charge mortgage is that a second charge mortgage is essentially a secured loan, which uses your home as security.

A debt consolidation remortgage puts your mortgage on a new deal and releases equity to pay off the debts.

A second charge mortgage means you will have a first mortgage/first charge loan, as well as the second mortgage that can be used to pay down debts.

The main advantage of a second charge mortgage is that it allows you to keep your mortgage and the associated interest rate, so is ideal for those wanting to keep their current interest rates.

How can I consolidate debt as part of my mortgage?

There are two main ways to consolidate your debt with your mortgage.

1. Remortgage your entire debt over to a new mortgage lender. This method lets you arrange a new mortgage for the value of your current mortgage, added to the debt you have. For example, if you have a mortgage to the value of £150,000 and debts of £25,000, you would take out a new mortgage with a new lender for £175,000. If you own a property where you have a suitable amount of equity, this is a useful solution. By doing this, you can also release equity which will allow you to pay off some of the money you owe using a lump sum. At the moment, with some lenders, the maximum Loan to Value (LTV) ratio allowed to do this is 90%. This means that if you own a home worth £100,000, the maximum you could borrow (including your existing mortgage) would be £90,000. If you want to pay less and lower your monthly payments, this is a good option because the mortgage rate will usually be the best available to you at the time.
2. Take out a new loan secured on your current mortgage. With this method, you’ll essentially have two mortgages on your home. For example, you might decide to keep your current £150,000 mortgage and also take out a new secured loan for the value of your £25,000 debt. If you choose this option, it’s worth remembering that your monthly repayments probably won’t drop as considerably. This might also be a better solution for those with a poor credit rating, or those who want to retain their current mortgage deal.

Things to consider before consolidating your debt into your mortgage

There are several things to consider when looking at consolidating your debts into your mortgage, such as the following:

• The amount of equity in your home – some lenders may consider a 90% LTV remortgage, however in most cases, 85% is the maximum LTV for debt consolidation, so you need to ensure you have enough equity in your home currently to cover your debts. The lower your current LTV, the better as otherwise you may enter the next LTV band meaning a higher mortgage interest rate. Work out your current LTV, and what your LTV will be once you’ve added your debts to your mortgage, and if it is 85% or under then you may be able to get a debt consolidation remortgage with us.
• Check if your current deal allows additional borrowing on your mortgage – if you can get extra borrowing on your mortgage, find out if there are any fees and rates available.
• Check if you can remortgage now – if you’re in the middle of a fixed rate, you may have to wait until the end of that term before you can apply for additional borrowing to avoid paying early redemption charges; so be sure to check the terms and conditions of your current mortgage deal. If you’re at the end of a fixed-term mortgage (such as 2 or 5 years), you may be able to remortgage with another lender and not incur early repayment charges.
• You’ll be paying the debt over a longer-term – your monthly payments will be considerably lower, however as they’ve been added to your mortgage term, it’s likely you’ll be paying the debt over a longer period than the initial terms of your unsecured debts.

Remortgage your debt here

What type of debts can I consolidate with a remortgage?

Typically, most unsecured debts can be consolidated when you remortgage.

Examples include:

• Credit cards.
• Unsecured personal loans.
• Car finance.
• Hire purchase agreements.

Some lenders ask for proof that the debts have been paid as part of the conditions of the mortgage offer, so be sure to get confirmation that the debts have been paid in case you’re asked for proof in future.

Note: Bad credit commercial mortgages are also useful for those looking for commercial properties with a poor credit history.

Can I get a debt consolidation remortgage if I’ve got a bad credit history?

Depending on the severity of your credit history, you may be able to find a lender that suits your needs.

If you’ve had a few late credit card payments, in theory, you’ll have more disposable income every month and the debt is secured, so you’ll be deemed less of a risk compared to more unsecured borrowing.

Lenders will like to see a history of payments being kept up to date, so ensure that for at least 6 months before your application that all payments are made on time.

We’ll help you find the right mortgage deal as we have access to over 80 lenders, so get in touch today to begin your debt consolidation remortgage application.

Mortgage Rates for Debt Consolidation

If in a considerable amount of debt many people attempt to clear it using a loan or a credit card, but the issue is that these generally have high-interest rates, so are not the best option for an individual already indebted.

An alternative route is to opt for a remortgage or a secured loan instead.

Since these are secured against your home, the interest rate offers you will receive are typically lower, allowing you to reduce your monthly outgoings and manage your debts better.

By consolidating all of your debts into a single loan, you will most likely reduce the amount of interest you will pay.

This means your debt will likely be easier to manage and pay off, making it less of a weight on your shoulders.

Remortgage your debt here

How do I know if a debt consolidation remortgage is the right choice for me?

If you’re struggling to keep track of your monthly payments, or you’re finding it difficult to make ends meet, a debt consolidation mortgage might make life easier.

Always think carefully before securing debts against your home, and bear in mind that in some cases, you might still end up paying more over a longer period of time.

Remortgage for debt consolidation Summary

We have access to more than 90 lenders, and we know a thing or two about debt consolidation mortgages.

If you’d like to talk to us about your circumstances, you can contact us on 01925 918960 or complete our quick Debt Consolidation Application Form and we’ll be in touch. 

One of our friendly advisors would be happy to help you.