If you have defaults or CCJs on your credit report, you might be wondering if you are able to get a mortgage. While some people might struggle to reconcile poor credit history with mortgage lending, it is possible to do. You might need to find a bigger deposit or put up with higher interest rates, but it is possible to get a mortgage following a CCJ or default. Read on to find out how to secure a mortgage with defaults and CCJs.
The first step to securing a mortgage is to understand what you are working with. Sign up to all major credit reference agencies so that you can see how mortgage providers see you. You should create an account with Experian, Equifax and Statutory Credit Report. You will have a different credit score with each provider, but this can help you to understand your position.
Start by checking that everything is accurate. If you paid off the CCJ within the required timeframe, it should not be applied to your credit report, so you can request to have this removed. Some people wrongly assume they have a CCJ when their debt has been fully repaid.
Once you know what mortgage providers will see when they look at your credit report, you can begin to fix key issues.
Some mortgage providers will reject individuals with CCJs immediately. Others will look at other factors and take a more considered approach. Each lender is different and you can’t assume that being rejected by one lender means that all lenders will reject you. Take the time to find a specialist lender that will work with you rather than against you.
A CCJ or default can only stay on your credit report for six years. After this time, they will be removed and no trace will remain. If they aren’t removed in time, get in touch with your creditor to confirm your debts have been paid and you have completed any County Court Judgements.
If you can wait it out, then it will be much easier to get a mortgage with the CCJ or default removed from your file. This will give you access to a wider range of lenders and preferential interest rates. If you cannot wait, you might need to be more flexible with your choices.
In many cases, getting a mortgage with a CCJ or default is difficult but not impossible (see here). You may be required to secure a larger deposit, which can seem impossible if you don’t have access to the funds. One way to increase your deposit amount without increasing your costs is to look for a cheaper property. You might have to compromise on some of the features you would prefer, or look for a property that needs a bit of DIY work, but it can help to get you on the property ladder.
The good news is that paying back your mortgage is a great way to build your credit score. This means that once the CCJ or default is removed from your credit report, you will already be well on your way to building your credit. This can then help you to secure loans for home improvements.
If you are hoping to get on the property ladder with a CCJ or default, remember that it isn’t impossible. You may be required to wait a little longer than you might hope, or you might have to shop around more than another borrower, but the rewards will be worth it in the long run.