If you owe someone money, they may apply for a County Court Judgment ordering you to pay it back. Those orders typically go by the common term of CCJs. Can I get a mortgage with an unsatisfied CCJ this post will explore this in more details.
As Citizens Advice warns, once you have a CCJ against you, it is likely to affect your credit rating – so, making it challenging to secure credit in the future and, most critically, a mortgage.
Simply having a CCJ against you, though, is by no means the end of the story. A record number of CCJs were issued in 2019, reported the Guardian newspaper recently – a volume that has doubled since 2012. A CCJ alone may not prevent you from getting a mortgage.
What is taken into account?
There is little doubt that a CCJ adversely affects your credit rating – and a healthy credit rating is the route to success in obtaining any kind of mortgage. The CCJ appears on your credit report, and that is the information held by the credit reference agencies who, in turn, advise any mortgage lender to whom you have applied.
As far as many mortgage lenders are concerned, however, what is more, important than your getting a CCJ in the first place is how you responded to it:
- if you returned by paying off the debt within 30 days of the CCJ being issued, you might apply to have the CCJ removed from the Register of Judgments held by the County Court – and once that entry is removed from the Register, the credit reference agencies are automatically informed so that all details of your CCJ are then removed from your credit record;
- if you let slip that initial 30 days but pay off your debt after that date, the official Register will show that the CCJ has been “satisfied” – the credit reference agencies are duly informed, and your credit record bears a note referring to the satisfied CCJ until that note, too, is removed after a period of six years;
- if you fail to pay the debt, the Register shows that it remains unsatisfied;
- whether the CCJ is satisfied or unsatisfied, however, the record is removed from the Register of Judgments after a period of six years.
So, can I get a mortgage with unsatisfied CCJ?
Once again, it is worth repeating that a CCJ adversely affects your credit rating and, therefore, reduces the size of the pool of potential mortgage lenders to whom you might want to apply.
Some lenders might insist that the CCJ has been satisfied for at least 12 months’ before you can apply for a mortgage; other lenders may be content so long as the CCJ has been met.
But there are some – admittedly fewer – lenders who are prepared to consider a mortgage application even if you have an unsatisfied CCJ. Although the pool of potential lenders is smaller, the conditions are likely to be tougher – a lower loan to value (LTV) ratio might be offered (so you’ll need a sizeable deposit) and you may need to pay a higher rate of interest. The following factors might also improve your chances of success:
- when was the CCJ issued? – essentially, the longer ago, the better, with most lenders likely to insist that your CCJ was registered at least two years ago;
- deposit – as with any mortgage application, you stand a greater chance of success the more significant the deposit you can put down (the lower the LTV you are seeking), and if you are applying for a mortgage with unsatisfied CCJ you need all the help you can get, so need the biggest deposit you can muster;
- the number of CCJs – one CCJ makes life difficult in securing a mortgage, two or more, especially if one or more remain unsatisfied, is likely to make the situation impossible. Even when CCJs have been satisfied, most lenders will be looking for no more than two outstanding CCJs as a maximum;
- the CCJ amount – lenders, will also consider the size of the debt addressed by the CCJ. If it was for a significant sum, then you may need to be prepared for a lower LTV to be offered or a higher rate of interest.
Although it is likely to prove more challenging to get a mortgage with unsatisfied CCJ, it is by no means impossible. The pool of potential lenders is significantly smaller, and your success may be affected by the age of the debt, the size of the deposit you have (and the LTV you are offered), the number of CCJs on your credit record, and the size of the debt or debts involved.