Self-Employed Mortgage With CCJ
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Self-Employed Mortgage With CCJ
Jim Overall explains how the mortgage process works for the self-employed with County Court Judgments (CCJs).
Can I get a mortgage as someone who is self-employed with a CCJ?
Yes, depending on a number of factors. We need to understand the size of the CCJ and when it was registered. Is it satisfied? Is it the only one you’ve got? We would do a fact-find, get your credit file and see what’s the right option for you.
How do I find out if I have a CCJ as a self-employed worker?
I’ve seen quite a few cases where a client doesn’t know there’s a CCJ in the background. All of a sudden we get a decline, maybe at Agreement in Principle stage.
We ask the client if they have any issues with credit, and they say no, but when we look at their file there may be a parking fine that’s turned into a CCJ, or an unpaid water bill. It’s something they just didn’t know about.
It’s not the end of the world. We just have a look at what the CCJ is, how much it was for and when it was registered. We then find options available to that individual.
What mortgage lenders accept CCJs if you’re self-employed? Can mortgage lenders see a CCJ after six years?
Yes, of the lenders that accept you if you’re self-employed with a CCJ, they won’t differentiate on your employment type. Effectively, if you’ve got a CCJ, it won’t make any difference whether you’re employed or self-employed.
It’s the CCJ that’s going to override everything. It’s a case of finding out when it was registered, what it was for and looking at your credit file. After six years, officially a CCJ comes off your credit file and, in theory, lenders won’t see that when they do a credit search.
What documents will I need to provide if I have a CCJ and I’m self-employed? Are there any differences in this scenario?
The main difference is the documents you need to show a lender because you’re self-employed. If you’re employed, we need payslips and maybe bonus payslips and bank statements.
If you’re self-employed, it’s your tax documents. It also depends on whether you’re a limited company or a sole trader – that determines which documents you have to give us.
You won’t need any more documents just because you’ve got a CCJ – other than maybe a copy of the credit file.
Will I need a larger deposit if I’m self-employed with a CCJ?
It’s not the self-employed part that’s going to determine what deposit you put down, it’s the CCJ and therefore the lender we go with.
Some lenders may be happy to do this, but only at an 85% Loan to Value, for example. In that case you need a 15% deposit – which might be more than you were hoping to put down.
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Does the date of my CCJ matter for a mortgage if I’m self-employed?
Definitely. As we mentioned earlier, after six years, it officially comes off your credit file. But a lot of lenders will ignore a CCJ if it’s been satisfied and was registered more than three years ago. Some may require it to have been satisfied for three years.
Others can consider it if it was registered three years ago, regardless of when it’s satisfied. That’s why we need to look at your credit file to see exactly when it was registered, if it has been satisfied, and when.
Does the size of the CCJ affect my mortgage application as someone who is self-employed?
It’s purely down to the size of the CCJ. Whether you’re self-employed or employed won’t affect that.
How do you apply for a mortgage as someone who is self-employed with a CCJ?
First of all, speak to a mortgage broker because we have a lot of knowledge in terms of who we go to for your situation. Everybody’s different in terms of their income, size of CCJ and when it was registered.
We’d look at all those factors, with your priorities in mind. You might be looking to maximise your borrowing, or get better rates. That’s all going to be determined by the level of the CCJ in the background and the income you’ve got.
Aside from the CCJ, there are different ways of looking at income for the self-employed. We can potentially get the most borrowing available for you.
Can you remortgage if you are self-employed and have a CCJ? What happens if you are coming up to renewal in this scenario?
Again, the self-employed part is irrelevant to the remortgage. The CCJ could potentially hold you back, depending on the size and when it was registered.
Let’s say you did a five-year fixed rate and that’s coming to an end. You may have had a CCJ since, and it’s been registered and satisfied. That could still allow you to go to a fairly mainstream lender. If it’s still outstanding, it could hinder your choice of lenders.
Ultimately, if you can’t go to another lender because of the CCJ, you could always potentially do a product transfer with your existing lender. They would just give you another follow-on rate.
Can you get a Buy to Let mortgage if you are self-employed with a CCJ?
Again, it’s not the self-employed part that’s holding you back, it will be the CCJ. For a Buy to Let mortgage, credit scoring with lenders can be a little more severe. You need to be more squeaky clean with Buy to Let.
That just means an unsatisfied CCJ could hinder your approval with mainstream lenders, but there may be a more adverse type lender we can go to. It’s going to be case-specific. We can even advise you on whether it’s worth satisfying that CCJ if it opens up a lender and saves you quite a bit of money.
You’ve demonstrated how a mortgage broker can help – any final thoughts?
Do check your credit file if you’ve got any doubts at all. A lot of people don’t know that they’ve even got CCJs – they just pop up. You could discover an unsatisfied CCJ registered two or so years ago, which can cause issues.
Having said that, the majority of people are notified about a CCJ. If you know you have one, get in touch with a mortgage broker to help you go through it. Perhaps you’ll find that now isn’t the best time, but in 12 months you will be in a much better position to get a mortgage. So speak to an adviser first.
Key Takeaways:
- Whether you are employed or self-employed, the CCJ is the overriding factor for a mortgage application.
- The date the CCJ was registered and whether it has been satisfied are significant. A CCJ officially comes off your credit file after six years, and many lenders are more lenient if it was registered or satisfied more than three years ago.
- Check your credit file, as many people are unaware of an existing CCJ (for example, from an unpaid parking fine or water bill). Lenders will check your credit file to find the CCJ’s details (size, registration date, and satisfied status).
- The presence of a CCJ can determine the required deposit, as some lenders may only offer a mortgage at a lower Loan to Value (LTV) – for example, 85% LTV, requiring a 15% deposit.
- It is highly recommended to speak to a mortgage broker, as they can find the right option for your specific situation.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.