You might think you can’t get a mortgage if you have previous credit defaults or even a County Court Judgment. However, the good news is that there are mortgages for people with defaults, and there are even mortgages for people with a previous County Court Judgment in some cases.
What is a credit default?
A credit default occurs when you fail to pay a debt, such as a mobile contract, utility bill or personal loan. When you miss payments – usually over three to six months - the creditor will send reminders and ask you to pay. If you don’t make the payment or come to an arrangement with the creditor in time, they will send you a default notice and report all missed payments to credit reference agencies.
What is a court Judgment?
A court judgment is a decision made by the court. If you don’t pay a creditor, the creditor can issue a default notice and then take legal action by asking a judge to make you pay. They must issue the default notice before taking legal action.
If there is no resolution after the default notice, the creditor will send you a County Court Judgment claim form. This is your opportunity to challenge the claim. If you don’t challenge the claim or the court sides with the creditor, they will issue a County Court Judgment (CCJ) against you.
A County Court Judgment orders you to pay the creditor, and if you fail to do so, the creditor can ask for a warrant to use enforcement action, which may include the use of bailiffs or even taking money from your wages.
How do defaults and court judgments affect your credit file?
The missed payments leading to a default and any subsequent court judgments will be recorded on your credit file. These records will be visible to any creditor that looks at your credit file in the future and they will significantly reduce your credit score.
Any missed payments and court judgments will remain on your credit file for six years. These records can change to “satisfied” if the debt is repaid, which will somewhat improve your score. County Court Judgments can be removed altogether if the debt is fully cleared within one month of the County Court Judgment being issued.
Can you get a mortgage with defaults?
Yes - it’s still possible to get approved for a mortgage if you have previous defaults on your credit report. This includes mortgages for first-time buyers, homeowners remortgaging and BTL mortgages. However, you’re most likely to be approved for a bad credit mortgage, which is a mortgage deal specifically targeting people with an unsatisfactory credit history.
Your ability to get a mortgage will depend on several factors, including details about the default, including if it has been satisfied and the length of time that has passed since the default occurred.
How long after a default can you get a mortgage?
There is no fixed timescale to get a mortgage after a default is added to your credit report. Some mortgage providers will still approve you for a mortgage if you have two or fewer defaults within the last two years.
Can you get a mortgage with a County Court Judgment?
It’s still possible to get mortgage approval with a previous County Court Judgment. The mortgage lender will look into details of the County Court Judgment to inform its decision. This includes:
- Whether the County Court Judgment is settled or not – a settled County Court Judgment greatly improves your chances
- Time since the County Court Judgment was issued – the more time that has passed the greater your chances
- Size of the County Court Judgment debt – if the debt was for more than £2,000 and it was issued within the last two years then it can be more difficult. Larger County Court Judgment debts older than two years aren’t as big of a problem.
- Number of County Court Judgments issued – if you have more than two County Court Judgments within the last two years your chances of approval decrease
- Other credit score records – other records on your credit report can influence the lender’s decision
What is a bad credit mortgage?
To improve your chances of getting a mortgage with defaults or a County Court Judgment, you may want to consider applying for a bad credit mortgage. These mortgages, which may also be called a default mortgage or County Court Judgment mortgage, are aimed at people with a poor credit history due to missing debt repayments and receiving court judgments.
Pros and cons of a default or County Court Judgment mortgage?
There are advantages and disadvantages of using a mortgage for people with defaults or a County Court Judgment. You need to be aware of these before applying.
Advantages
- These mortgages provide credit to buy property when other mortgage deals aren’t available to you.
- These mortgages can be used to purchase your first home, to remortgage and sometimes to buy a BTL property.
- You might use these mortgages to secure a property and then remortgage to a better deal later when your credit file has improved.
Disadvantages
- These mortgages may not offer the same size loan as standard mortgage deals
- These mortgages may come with a higher rate of interest than standard mortgage deals
- These mortgages may not have additional features and benefits, which are sometimes offered with standard mortgages
Where can you get a default or court judgment mortgage?
Default mortgages and County Court Judgment mortgages are available from specialist lenders providing loans to people with adverse credit history. Click Mortgages can help you identify the most suitable options for you. Call us now on 0800 0854401 or Click the Enquire button.
