Getting a mortgage after a County Court Judgement
In recent years, borrowers with credit issues have been some of the hardest hit by the global financial crisis. The choice of mortgages available to people with defaults, missed payments or County Court Judgements (CCJ) has reduced significantly as lenders pulled out of the so-called 'sub-prime' sector.
However, if you do have a CCJ then you may still be able to get the mortgage that you need.
What is a County Court Judgement?
A County Court Judgment is a type of court order in England, Wales and Northern Ireland that may be registered against you if you fail to repay money you owe.
Before a CCJ is registered your creditor is obliged to send you a 'default notice' or a 'letter before action', depending on the type of debt.
Getting a mortgage will often depend on the circumstances of a CCJ
If you have a CCJ then you may still be able to get the mortgage that you need. The factors that a lender is likely to take into consideration are:
- The amount of the CCJ
- The circumstances in which it was placed on your credit file
- How long ago the judgement was registered
Mortgage expert Ray Boulger says: “If it is a small amount, no more than £50 or £100, some of the mainstream lenders will consider an application from somebody in that situation if that is the only problem they have got. Some lenders will do it on a case-by case-basis if you can demonstrate that the reasons you incurred the CCJs are not going to recur.”
Many lenders also want to see that your credit position has not deteriorated and that you have managed your credit responsibly over the last one or two years.
If your CCJ is more recent or for a larger amount then you may find it hard to get a mortgage with a High Street lender, although there are other alternatives
Increasing competition in the sub-prime sector
While many lenders withdrew their sub-prime products in the wake of the global financial crisis, there are a number of lenders who do offer home loans to borrowers with a less than perfect credit history.
In the summer of 2014, financial analysts Moneyfacts reported that the various specialist lenders in the market offered a total of 119 different mortgages, made up of 66 variable deals and 53 fixed-rate ones.
Competition in this sector is improving and a specialist mortgage broker may be able to help you find the most appropriate lender for your needs.
Expect to pay a higher interest rate
There are a number of lenders in the market who offer home loans to people with a County Court Judgement although you should be aware that restrictions are likely to apply. For example:
- You are likely to have to put down a larger deposit. Expect to have to provide a deposit of at least 25%
- The interest rates charged are likely to be higher to reflect the perceived additional risk. You can expect to pay at least twice as much as the very best fixed/variable rate deals in the marketplace
- You may have to pay higher arrangement fees than with High Street lenders