Brokers offer help to mortgage applicants with CCJs
Teacher Sarah Arrowsmith and her fiancé Ross Tredger were poised to submit an offer on a home when she learned of the CCJ against her, The Mirror reported.
Arrowsmith had earlier disputed a parking ticket and believed that it was cancelled, but when the CCJ showed up on her credit record her mortgage application was declined.
Mortgage advisers say CCJs on credit reports are becoming more widespread, but in most cases they should not result in a mortgage application being denied.
“That’s business as usual for a broker like us,” said Miles Robinson, mortgage sales director at One 77 Mortgages.
“There are lots of lenders in the market now that can assist in a situation like that. A first-time buyer with a credit blip, even when it’s a high loan-to-value (LTV), should find it a lot easier to source a mortgage.”
CCJ numbers increasing
The number of CCJs issued to consumers jumped by five per cent to 321,044 in the first three months of 2019 compared to the same period a year earlier, figures from the Registry Trust show. The average CCJ value fell by six per cent to £1,398.
Paul Adams, sales director at lender Pepper Money, said: “Individuals have more regular commitments these days. Mobile phones, gym membership and pay TV mean that there are more payments potentially to fall behind on. And more organisations are using CCJs as a way to chase debt.
“From a lender point of view, we look at the past but we don’t let that dictate whether this person will be a reliable customer for the future.”
CCJs for as little as £20
Robinson agreed: “Telecommunications providers are probably the worst culprits of slapping on a default or CCJ. If you haven’t paid for four months they’ll put a CCJ against you. I’ve seen them for as low as £20. A lot of lenders now understand that and are ignoring those.
“There are lenders who might not lend, particularly at high LTV, but the market as a whole isn’t looking for reasons not to lend.”
If an application is denied by a high street lender, a mortgage adviser can access deals from specialist lenders.
According to Robinson, “money is a lot cheaper to borrow,” and rates from specialist lenders “are a lot more competitive than they’ve ever been.”
Whereas a first-time mortgage from the high street might offer 1.9 per cent interest, a specialist lender could be about 2.7 per cent.
“You’re looking at a small difference per month, and yes the rate’s a bit higher, but you still get your first home and two or three years down the line you re-mortgage back to the high street,” Robinson said.
New market dynamic
Danny Belton, head of lender relationships at L&G Mortgage Club said that the “new dynamic”, which the increase in CCJs has brought to the market, is driving growth faster in specialist compared to mainstream lending.
“The number of customers with CCJs has dramatically increased over the last five years. The dynamic is changing in that we’re finding a parking ticket or a missed phone bill, or a dispute about a very, very small amount of money, ends up being a CCJ,” Belton said.
“The more vanilla, high street lenders tend not to accept it and that opens up the market to specialist lenders. We’ve seen an increase in the amount of business being written through specialist lenders and that is probably outperforming the normal market growth,” he said.
“A number of the regional building societies have moved into this sector and are helping customers in that respect. That’s another area where we’ve seen growth outperforming the market,” Belton added.
Lenders more open below £500
In Arrowsmith’s case, the ticket was issued by private car park management service Parking Eye, at a branch of Halfords where her car was booked for a service. The retailer repeatedly assured Arrowsmith that she was not liable for a fine and that the ticket would be stopped.
However, a CCJ was issued against her and she did not receive the letters because she had moved home.
Parking Eye told The Mirror it had no record of any communication about the matter.
Stephanie Seddon, mortgage and protection advisor Just Mortgages, added that many lenders will look at a case particularly when the CCJ is for an amount below £500.
“Leeds Building Society and Accord are a lot more open about CCJs. They know that unpaid parking tickets can lead to CCJs quite easily,” she said.
“If the situation is like the one described, particularly with someone who is a teacher, they will usually be prepared to underwrite manually. Kensington and Precise are good lenders too, because they specialise in adverse credit cases.”