County Court Judgements and Mortgages - The Basics
County Court Judgements and Mortgages - The Basics
County Court Judgements (CCJ) are one of the biggest single factors in your credit history that adversely affects your mortgage application. Most lenders will not agree to a mortgage as a matter of policy for anyone who has a County Court Judgements. The County Court Judgements will be shown when a full credit check is done at application stage.
County Court Judgements (CCJs) can have an adverse effect on the ease of obtaining a mortgage or any other type of financing. When a mortgage application is submitted, the provider considers the whole financial background, including any judgments that have been made against the applicant. Of all of the negative aspects that can be revealed as part of a credit search, County Court Judgements are highly detrimental to the availability of mortgage financing. In fact, most high street banks will not offer mortgages to those with County Court Judgements.
How do County Court Judgements Happen?
When a creditor who has not received an amount he believes is due they can issue a County Claim Form (Summons) and you will have been notified that the creditor intends to take legal action to recover the money. You now have the option to agree to the debt or deny that there is one.
If you agree to the debt then you disclose your incomings and outgoings to the court and they generate a payment plan that will not leave you in financial difficulty, this is a County Court Judgement.
If you deny that the debt is owed, the court will request further information and will then decide whether the money is owed or not. If it is decided that the money is owed, a payment plan will be determined and a County Court Judgement issued.
An adverse credit history might be due to a situation from some years previously and because most people don’t check their history regularly they have no idea even that they have poor credit. Failed financial applications also weaken credit ratings.
What Impact Do County Court Judgements Have on a Mortgage
A County Court Judgement does not necessarily mean that you cannot get a mortgage but it will seriously affect your credit rating. Many lenders will not give a mortgage to people with County Court Judgements but there are plenty of mortgage companies that will.
If, for example, you have a County Court Judgement and have kept up payments on it for a good period of time then lenders will be more willing to consider an application for a mortgage. There are likely to be, however, penalties such as higher interest rates.
There are specialist mortgage companies that will consider people with County Court Judgements but they will not offer the standard of deals that mainstream lenders do so it is worth approaching the high street lenders first to see if they will consider you.
Introduction to Avoiding County Court Judgements
It is better to avoid a County Court Judgement than to ever get one. When a County Court Judgement is entered with a court it stays on the register of judgements for six years after the debt is paid in full.
Before the Claim is Issued
If you find yourself in the position that will lead to bills and expenses not being paid then it is time to re-evaluate your finances. If a County Court Judgement is likely then this should be done sooner rather than later, once the proceedings start it is hard to avoid a judgement.
The cost of the claim against you will be high for the creditor as well as for yourself so many creditor may well be open to coming to a arrangement for making payments. This would avoid the creditor waiting for the courts and you getting a County Court Judgement.
The first step is to take a realistic approach to looking at your incomings and outgoings, work out what you can afford to pay and approach the creditor with these figures. If a County Court Judgement can be avoided you are putting yourself and your credit rating in a much better financial position.
Longer Term Planning Against County Court Judgements
A single County Court Judgement for someone who has a very good credit history may not necessarily affect their chance to get a standard mortgage but for others with an adverse credit history and the prospect of more County Court Judgements then the long term outlook is worse. If there are regular payment defaults, County Court Judgements or even a home repossession then it would be worth considering financial priorities before looking to get a mortgage. It may be the case that you would need to repair your credit rating before embarking on further credit agreements.
Anyone who is struggling to manage debts should think carefully before entering into a mortgage agreement, as this could add to credit difficulties and cause even larger rating issues, in the future. Sometimes, those with County Court Judgements would be better off resolving their imminent issues, before starting on the mortgage trail.
What To Do If You Have A County Court Judgement
If you already have a County Court Judgement on your record, all is not lost. There are still several things that can be done to minimise the impact of this judgment on your ongoing credit rating and mortgage opportunities.
Key Tips for Those with County Court Judgements
- Immediate payment
If you have a County Court Judgement and can pay the debt in full immediately then it is best to do so, although it remains on record for six more years you can prove willingness and ability to pay with a Certificate of Satisfaction. This should be submitted with a mortgage application to give the lender more confidence in your application.
- County Court Judgement Circumstances
If your County Court Judgement is a short-term or one-off problem and has not happened before and is unlikely to do so again then this is worth documenting for the mortgage provider. Lenders are usually concerned with people’s ability to pay regularly and a one-off problem, as opposed to a recurring one, will reassure them.
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Managing finances
If you have been with your current bank for a while and you can demonstrate that the circumstances of your County Court Judgement are not due to negligent management of finances they may be more willing to consider you for a mortgage. In some cases despite not normally giving mortgages to people with County Court JudgementS. You will need to prove that despite the current circumstances you are capable of managing your finances.
- Don’t lose hope
It is also worth bearing in mind that credit has become an increasingly common issue. Currently, it is estimated that more than 9 million individuals have some form of adverse credit, be it a missed mortgage payment or a huge unpaid debt. With this in mind, it is important not to lose hope. Even those with very high debts are not in a hopeless position. Although obtaining a mortgage may not be the best or easiest thing to do, this does not mean that it is impossible.
Specialist County Court Judgement Mortgage Brokers
Unfortunately, if you have a County Court Judgement, finding a suitable mortgage provider can prove extremely difficult. In many cases, banks will simply not consider someone with a County Court Judgement regardless of the circumstances surrounding the judgment. This can mean that a borrower does not have the full opportunity to shop around and must opt for specialist brokers and providers, this will certainly not achieve a favourable interest rate.
High Street Lenders and County Court Judgements
As we’ve previously seen most high street lenders will not consider a mortgage for someone who has a County Court Judgement on their record therefore if you want a standard high street mortgage you will have to wait six years for the record to be cleared.
In those six years it is possible to enhance your position for a mortgage application. Obtain a credit report and address any other debt issues that it contains. Pay-off any credit or store cards. If at all possible save for a larger deposit to reduce payments or mortgage term when you do apply.
If the County Court Judgement is the only negative issue on your record, then it may be worth presenting your case to your current high street bank, as they may be able to make a better judgment on your situation.
Specialist County Court Judgement Mortgage Providers
There are specialist County Court Judgement mortgage providers and these are best approached and compared through an independent mortgage broker who knows the market. They will be obliged to find you the best deal.
Specialist provider will be far more likely to give you the financing you require but it will be at a cost. The interest rates are usually higher and some of the terms may not be favourable, such as extended tie-in periods.
County Court Judgement Resources
If you are looking for a mortgage and have a County Court Judgement then it is usually best to go to a mortgage broker because they are able to look at the whole market and get the best deal. Looking for County Court Judgement-related mortgage is different to researching a normal mortgage, the tie-in periods and interest rates are usually structured differently.
Debt Assistance Organisations
It is a good idea to seek professional advice on debt management if you have a County Court Judgement. The consequences of a County Court Judgement, or any debt, being handled incorrectly could be detrimental to future financial arrangements.
