Buy to Let with a CCJ

Can a limited company Buy to Let mortgage be easier with a CCJ?

There’s no real difference. Most lenders will offer both personal Buy to Let and limited company Buy to Let. If they don’t mind you having a CCJ to a certain level, it wouldn’t really be any easier or harder, whether it’s via the company or personal route.

Can you add additional properties to an existing Buy to Let portfolio with a CCJ?

Yes. The CCJ is relevant to the individual. Perhaps they’ve got a portfolio, they’ve encountered an issue and had a County Court Judgment.

There are still lenders that would be OK to go to as a portfolio landlord. Different rules come into play when you’re a portfolio landlord, depending on how many properties you have. If they’re all at 75% or there’s more equity, that can help. Ultimately, as a portfolio landlord, you could still get a mortgage or add a new property to your portfolio if you have the deposit there.

What if I’m a first-time buyer with a CCJ? Can I still get a Buy to Let mortgage?

Yes. You can be a first-time buyer, first time landlord with a CCJ. Fewer lenders will do that, though. Many of them like you to own your own home before they’ll give you a Buy to Let mortgage.

However, some lenders are comfortable with you being a first-time buyer, first time landlord and also have criteria to accept a CCJ.

As I said earlier, there’s a wide variance between a £200 parking ticket and an unpaid bill of £50,000. Those would be considered differently, so it does depend on the specifics.

What are the consequences of defaulting on a Buy to Let mortgage?

Defaulting on any mortgage has the same impact. A default is registered and sits on your credit file for the next five, six or seven years. It can have quite a drastic impact on your ability to obtain credit in future.

When we talk to lenders that accept people who have had adverse credit blips, it’s all about the story and the reason why.

It’s still possible to obtain finance, even if you’ve missed a mortgage payment in the past or defaulted on certain types of debt. It could be down to something understandable – a lost job or something happening in life. In those cases the lenders can be very amenable.

What are the risks of Buy to Let investing with bad credit?

If your credit is not perfect, fewer lenders are available and they’re going to charge you more for the privilege. You might find that the interest rate or fees are higher with that specific lender.

The biggest impact is potentially paying more because your credit background isn’t as good as it could be.

Are there alternative finance options if a Buy to Let mortgage is declined?

Yes, there are. It would depend on the circumstances – if it’s declined because of very poor credit, sometimes we won’t be able to find an alternative.

But specific lenders exist for adverse credit lending, so there are many different places to try. As a broker we’ve got access to lots of different lenders – it’s much easier than you trying to do that yourself.

Bridging finance may be an option in place of a Buy to Let mortgage, and lots of people use these to buy using a short-term 6, 12 or 18 month product. Those lenders can be quite happy even if there is adverse credit in the background.

You’ve demonstrated how a mortgage broker can help here. Any final thoughts?

We have specialists in this area – some of our brokers have worked in firms that only do adverse lending. It’s such an eye-opener to talk to someone who really understands this type of financing, and more lenders now want to operate in this space.

If a CCJ or default is under a certain size, they ignore it. If they’re over that size, they’ll do it on specific terms. Sometimes we can even be surprised that we can help someone with quite serious credit issues.

As a broker, we’ve got that access. That’s the biggest thing – being able to go to multiple different places to get your case to fit.

Key Takeaways:

• You can still obtain a Buy to Let mortgage even with a County Court Judgment (CCJ), as many lenders allow them, although some may not accept a very large number of CCJs.
• The typical deposit required is 25%, but with a CCJ some lenders might stipulate 30% or 35%. Some lenders allow mortgages with either an ‘unsatisfied’ (unpaid) or ‘satisfied’ (paid) CCJ, but others may specifically require the debt to be satisfied.
• Lenders will run a credit check for a Buy to Let mortgage. Whether you are employed, self-employed, or a contractor, you can get a mortgage as long as you can prove your income, with many lenders typically wanting a minimum income of £20,000 to £25,000 a year.
• While a lender won’t specifically stress-test the rental income more harshly because of a CCJ, having one is more likely to impact the yes/no decision on the application. The biggest risk of investing with bad credit is potentially paying more, as fewer lenders are available and may charge higher interest rates or fees.
• You can still remortgage a Buy to Let property with a CCJ, add additional properties to an existing portfolio, and even get a Buy to Let mortgage as a first-time buyer/landlord with a CCJ, although fewer lenders offer this. Alternative finance, such as bridging finance, is also an option if a Buy to Let mortgage is declined, as some adverse credit lenders are available.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.

SOME BRIDGING FINANCE IS NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.