If you have a CCJ you’ll be pleased to know that bridging loans are still a viable option for property purchases or raising capital.
Many people assume a CCJ closes all doors to property finance but specialist bridging lenders see things differently. They’re more interested in the value of your property and your repayment plans than your credit history.
What is a CCJ and How Does it Affect Borrowing
A CCJ (County Court Judgement) appears on your credit file when you’ve not paid a debt.
It’s a court order used in England, Wales and Northern Ireland that remains on your credit file for 6 years even after you’ve settled the debt.
The impact of a CCJ varies greatly depending on its size and age.
A small CCJ from several years ago won’t carry the same weight as multiple recent ones. When the court issues a judgment they outline everything from the amount owed to payment deadlines.
This information becomes public record and visible to any lender checking your file.
How Bridging Lenders View CCJs Differently
Bridging lenders view CCJs with a more practical eye than high street banks.
They’re interested in the here and now – your current position and future plans take priority over past financial difficulties. Many offer “non-status” loans where the property and exit strategy matter more than your financial history.
They know property investors and developers face financial challenges but that doesn’t diminish their ability to spot and execute a good property deal.
Read more: What is a Non-Status Bridging Loan?
What Really Matters
Your property’s value is at the heart of any bridging loan decision.
Lenders will scrutinise the current market value, condition, location and potential growth. A good property in a good area can often outweigh a CCJ.
Your repayment plan needs to be just as solid. Whether you’re selling the property or refinancing with a traditional mortgage you’ll need to show how and when you’ll repay the loan. The more detail and realism in your plans the better your chances of approval.
If your exit plan does involve refinancing then you will need to provide some evidence that this is achievable (as you have a CCJ). In most instances, a lender Decision in Principle (DIP) should do the trick. But for more complex cases, further proof will be needed.
The Costs
The interest rates on offer may be higher than standard bridging loans but you will have better access to finance than traditional routes when you have a CCJ.
Bridging lenders are open to negotiation, providing the deal stacks up.
If you have a project that requires 50% LTV funding for 12 months you might be able to persuade a lender to give you near prime terms, if the property is acceptable. Despite having a CCJ, the lending risk is reduced because of the loan to value and security offered.
You’ll still need the standard cash deposit of 20-25% of the property’s value and arrangement fees are typically 2% of the loan amount.
Let’s talk bridging loans!
Making Your Application Stronger
Being open about your CCJ helps build trust with lenders.
They’ll find it out anyway so it’s better to address it head on and explain the circumstances. If possible showing you’ve settled the judgement or made regular payments can help your case.
Additional security can help your case.
This might mean a higher deposit or using another property as additional security. If you’re borrowing through a company a personal guarantee can help get better terms.
Related reading: First, Second & Specialist Charges in Bridging Finance
The Application Process
The bridging loan application process is quick even with a CCJ.
Most lenders aim to complete within 2-3 weeks sometimes faster if needed. You’ll start by talking to a broker who will give you an initial idea of what’s possible.
After you submit your full application and supporting documents the lender will arrange credit checks and a property valuation before making their final offer.
If you have chosen to go with a non-status bridging loan the process is even quicker, as it misses out the initial credit checks. We can offer non-status loans up to 70% LTV.
Next Steps
In these situations the first step is to obtain a copy of your credit report.
Knowing exactly what’s recorded will help you explain your situation to lenders. Document your property details and create a clear repayment plan before approaching lenders.
At Respect Capital we help clients with CCJs and adverse credit get bridging finance every week.
Past financial issues shouldn’t limit your current options. We have an extensive network of specialist lenders so we can often find a solution where others can’t.
Every application is different and bridging finance offers more flexibility than most people realise. The key is working with experienced professionals who understand the bridging market and borrowing with a CCJ.
Need some help?
If you need a short-term bridging loan then a specialist broker is a good place to start. You will get expert help and advice along with a wide range of lenders to choose from.
To get matched with a specialist broker, please call us on 0330 030 5050.
