5 observations on whether to pay off CCJs to get a CCJ mortgage
CCJ mortgages – the need to satisfy County court judgements explained.
There are no hard and fast rules to the dilemma of whether to pay off County court judgements to get a CCJ mortgage. That said, I deal with clients who have CCJs satisfied or otherwise on a daily basis so I’m well placed to share my findings. You will have to appreciate this is a generalisation and each case needs to discussed individually on its merits with an experienced mortgage broker, such as Niche Advice.
In my observations I may provide dual answers: one for standard lenders (such as retail banks and building societies) who typically offer interest rates from 2% to 5%; and specialist lenders (centralised lenders, who can only be accessed by mortgage brokers) 3.5% to 6%. I am also referring to CCJs in isolation, if you have had other credit issues then the observations may not be relevant.
My 5 observations on whether to pay off CCJs to get a CCJ mortgage are listed below:
1) Size of CCJ really does matter!
As a general rule lenders prefer mortgage applicants who have honoured their debts and satisfied them. However, it is not uncommon for me to see individual CCJs to the value of £10,000 and beyond and understandably to clear a CCJ of this magnitude would eat into anyone’s pocket. As there are no guarantees of acceptance this would be one to talk through before you plough ahead to get a CCJ mortgage. One CCJ less than £500 that is satisfied 12 months before application may be considered by the fringe standard lenders so the interest rates may still be competitive.
2) Age of the CCJ.
CCJs usually stay on your credit file for 6 years. Some standard lenders refuse to ever entertain them whilst they are still on your record. Specialist lenders will ignore them completely after two years of their county court registration regardless of whether the County court judgements have been satisfied or not.
3) How long would the CCJs need to be satisfied for?
This is an interesting one. If you approach a lender directly normally 6 to 12 months would be an absolute minimum. If however you go via a well known specialist mortgage broker in this field, such as Niche Advice, this timeframe could be reduced to 1 day before application or in the case of a remortgage deferred until completion.
4) How should I pay off a CCJ?
Unfortunately CCJs need to be repaid in one lump sum to get a CCJ mortgage. If you venture into an arrangement via a third party to repay the debt in instalments this will be viewed more dimly by the CCJ mortgage lenders than the CCJ itself, as this type of agreement would fall into the ‘debt management bracket’. Separately, some specialist CCJ lenders will allow you to remortgage to pay off your CCJs on completion.
5) Will any lender take my mortgage application if I do not intend to satisfy my CCJs?
As you are probably aware CCJs can occur for a variety of reasons. Simple lethargy to pay your debts or perhaps because of a dispute. Standard lenders are going to be more tolerant in the case of the latter particularly if you can provide documentation evidence from both sides of the argument to prove that this was the case.
The more specialist lenders are likely to ignore CCJs of less than £250 and those that are registered over 2 years ago irrespective of whether they have been satisfied.
For the full information on CCJ mortgage products rates and fees please complete the enquiry form on the right-hand side of this page or alternatively call us on T: (020) 7993 2044.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.