Finding a mortgage can be tough at the best of times but for someone with adverse credit such as a CCJ, it can be even harder. We are often asked if you can get a mortgage with a CCJ, and the short answer is yes it’s possible but obtaining that mortgage isn’t always as easy as it sounds and there are factors to consider before entering into a mortgage agreement. If you have a CCJ in your credit history lenders are less inclined to lend you money due to your previous problems when borrowing as they believe you to be a higher risk of not sticking to the agreement. In their eyes it doesn’t matter how innocent the CCJ is, a CCJ is still a CCJ regardless.
There are a number of key factors that impact whether you’ll be eligible for a mortgage with a CCJ. These include:
- The date of the CCJ
- Number of CCJ’s
- Amount of the CCJ
- If the CCJ is satisfied or unsatisfied
- Deposit you have available for the property
Luckily, there are a growing number of lenders approving mortgages for people with CCJ’s. Each lenders acceptance criteria differs, however it is important to note that it isn’t always just the CCJ that can cause a decline. For instance, a lender might accept the CCJ but perhaps they don’t deem your income and affordability acceptable for the size of mortgage you’re applying for or there could be other credit issues in your history that they consider unacceptable.
If you are approved for a mortgage even though you have adverse credit, there are a few things to be wary of so make sure you read the small print before borrowing. These can include things like:
- High charges for missing payments
- Large redemption penalties – this clause could mean that you can’t switch lenders for several years without paying a large fee even if the CCJ has fallen off your credit report
- Higher than normal mortgage repayment interest rates, typically by 5% or more.
- Please also be aware that you may have to pay a higher deposit, usually a minimum of 20%
So, where to start?
Firstly, you should have a sound understanding of your credit report so that there are no surprises along the way. Don’t forget that inaccuracies do happen so if there is something on your report that you aren’t sure of, query it.
Secondly, our advice would be to speak to a broker who specialises in mortgages for those with a less than perfect credit history. A specialist mortgage broker will take the time to understand your financial situation and can then advise you of your options. They know the market inside out and will be able to advise which lenders are likely to be more approachable given your circumstances.
Don’t forget that once the CCJ has fallen off your record and once you’re initial mortgage period is over, you’ll be able to remortgage and provided you haven’t had any further adverse credit you should be eligible for a lower interest rate mortgage.
Entering into a mortgage agreement is not something to be taken lightly so please take the time to understand the contract you are entering into. If there are any clauses that you are unsure of, discuss them with your mortgage advisor.
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