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Mortgages & Financial Services

Mortgages for those with Poor Credit History

What is a CCJ ?

A County Court Judgement or CCJ as it is commonly referred to is where a creditor has sought payment from you via the County Court and the Courts have found in favour of your creditor. If the payment is made quickly, then the Judgement is not recorded, otherwise a record may be recorded on your credit file.

Once the balance of the Judgment is repaid, your credit file should then be updated.

After 6 years from the Judgement being made, this should then be removed from your credit file.

Many Mortgage Lenders will require details of whay this Judgement was made, and depending on the amount, when the Judgement was recorded and when/if it the Judgement is satisfied.

Lenders are more likely to consider an application where the Judgement is satsifed, particularly with higher loan-to-value mortgages.

What is a Default / Late Payment ?

A default occurs when Lenders close your account as you have not maintained the payments as agreed. This may happen to accounts held with a bank, utility provider or mobile phone company.

A default can occur regardless of the amount owed and many are reported to be small amounts where people may have moved home and not settled a utility bill, or where people have switched to a new supplier. We see a great deal of defaults where people have even switched mobile phone providers and a small balance remains from their old provider.

It is therefore important that you review your credit file regularly to ensure this type of default does not occur.

Again, a default will remain on your credit file for 6 years. As per CCJs, lenders will may consider applications where this has occured.

What is an IVA ?

An IVA or Individual Voluntary Agreement is an arrangement between you and your creditors to assist you in repaying your debts at an affordable rate. In this case, you may have some of the debt owed written off.

An IVA will affect your credit rating as this again will remain on your credit file for 6 years after the commencement date. During this arrangement, default notices will also be added to your credit file.

Lenders may consider you for a Mortgage after the IVA has ended, but the loan-to-value offered may be lower and the interest rates and fees may be higher due to the increased risk to the lender.

What is Bankruptcy ?

Bankruptcy is a form of insolvency which is a declaration that you cannot reasonably pay off your unsecured debts. You can declare yourself Bankrupt or this can be done by a creditor to which you may owe a great deal of money.

Once you have been declared Bankrupt, you will no longer need to liaise with your creditors and this will be done by the Official Receiver or an Insolvency Practitioner.

A Bankruptcy order will usually last one year. During this time, your debts will be written off and your non-essential assets and spare income will be used to repay your creditors.

During the period of Bankruptcy you cannot borrow more than £500 without informing the Lender, Official Receiver or Insolvency Practitioner.

Once your Bankruptcy has ended (Discharged), obtaining a Mortgage is will be very difficult, even with a lower loan-to-value. Many lenders that will consider you after Bankruptcy may be specialist lenders and charge higher rates of interest and fees in line with the higher risk associated.

Will a CCJ, IVA, Default or Bankruptcy affect my mortgage application ?

As noted above, any type of adverse credit will lead to more difficulty in obtaining any type of lending and in particular, Mortgage Lending.

It is important that you obtain a detailed credit report BEFORE you start to apply for a mortgage, particularly if you feel there may be missed payments or any of the other issues above noted on your credit file.

As Mortgage Brokers with access to the whole of the market, our job is to find you a Mortgage that will suit your circumstance and with Lenders that may consider your previous credit history.


We would advise making an appointment to discuss you mortgage requirements with our office by calling 01642 885500 or click here to request a call back



YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Teesvale Ltd is authorised and regulated by the Financial Conduct Authority (FCS) registration number 302103. The FCA does not regulate most Buy to Let mortgages.