Although the Caribbean Court of Justice remains on a person’s credit file for six years, this does not necessarily mean there will be an automatic six-year mortgage ban, according to new research by Newspage, sponsored by The Mortgage Geezer.
They looked at the criteria of the ten largest UK lenders – Accord (a subsidiary of Yorkshire Building Society), Barclays, Coventry Building Society, Halifax, HSBC, Nationwide, NatWest, Santander, TSB and Virgin Money – to determine the prospects of applicants for mortgage loans with CCJs.
They have revealed which top lenders will accept CCJ and what factors they look at when assessing this.
Of these lenders, six will consider an applicant with a paid CCJ one year after it is registered.
Some have restricted the number or total value of judges the CCJ may accept. Others have relied on internal credit scoring, which means an applicant can meet published criteria but still be rejected after their full credit history is assessed.
Mutual building societies and specialist lenders sweep up many of these cases, explained Darryl Dover, founder of Bedford-based The Mortgage Geezer.
He said automated systems meant the initial agreement could be rejected in principle
“While major lenders such as TSB, Virgin and HSBC may consider small-paying CCJs (often less than £500), automated scoring can easily lead to rejection, even with these amounts,” he said.
“Fortunately, many mutual building societies and low-profile lenders evaluate credit manually rather than relying on strict scores.
“Depending on your CCJ amount, filing date, and whether they are satisfied, a specialist broker can match you with a flexible lender.”
How do mortgage lenders evaluate applicants for CCJs?
According to Newspage researchers, lenders look at the amount owed, the filing date and whether the judgment has been satisfied as their main focus.
A small ICJ that has been pushed immediately may be viewed differently from many recent or pending rulings. Lenders may also examine the cause of the debt and the applicant’s financial behavior since its registration.
A one-time problem caused by a specific life event can pose a different risk than an ongoing pattern of missed payments or unmanaged borrowing.
Ranald Mitchell, director of Norwich-based Charwin Mortgages, said lenders should research the circumstances behind the ruling.
“The CCJ is not a six-year mortgage ban,” he said. “The real question is what happened, why it happened, and why we can reasonably expect it not to happen again.
“A one-time parking fine or an isolated credit issue after a life event is very different from ongoing, unmanaged debt.
“This context is important, and with the right lender, we can often obtain an exception where published criteria alone may indicate a decline.”
He said that in fact, where the issue had been resolved, the recent conduct had been clean and there was a credible explanation that the case could be strong in favor of the applicant.
Which mortgage lenders accept paid CCJ?
According to Newspage, TSB, Barclays, HSBC, Virgin Money, Coventry Building Society and Accord are the six lenders that publish the criteria under which a paid CCJ can be considered after one year.
But acceptance is not guaranteed and some criteria may apply only when the CCJ value is less than a specified value. Applicants still must pass lender affordability tests, credit scoring and other eligibility requirements.
Preparing for your mortgage application with CCJ
Newspage suggests that potential applicants do a credit check with all three major credit reference agencies, because information on them can vary.
Ensure that the value, date and condition of the CCJ are properly recorded and evidence that it has been paid is obtained where applicable.
Submitting multiple speculative mortgage applications can result in multiple hard checks on your credit file, so this should be avoided. However, checking the criteria of the relevant lender before applying can reduce the risk of contacting a provider whose policy does not suit the circumstances.
So seeking advice from a broker can be really helpful. Richard Davidson, mortgage adviser at onlinemortgageadvisor.co.uk, said: “The main thing is to get advice and know your options, because different lenders have very different policies. Often, if your overall credit score is good, you can still adapt to a major lender.”
