Limited Company Director with CCJ

Are there mortgage lenders that work with directors who have adverse credit?

Yes. Multiple lenders actively work with company directors who have adverse credit, including CCJs.

If the CCJ is recent and over £500, specialist lenders such as Aldermore Bank, Kensington Mortgages, Pepper Money, Bluestone, Precise Mortgages, Vida Home Loans and Foundation Home Loans will all actively consider your application. That’s not an exhaustive list either.

Many high street lenders also have lending policies that accommodate CCJs, particularly older or smaller ones. Don’t assume that just because you have a CCJ, you’ll automatically have to use a specialist lender. The specific level and recency of the credit issues will determine which lenders are appropriate.

How will CCJs affect the mortgage options available to me as a limited company director?

The impact depends almost entirely on when the CCJ was registered and how much it was for.

A small CCJ registered more than three years ago may not even be a significant issue. But a large, relatively recent CCJ, say within the past 24 months, is likely to mean you’ll need a higher deposit and may be restricted to specialist lenders with higher interest rates.

The only way to see all the options is to be upfront and honest with your mortgage adviser, provide all the documentation and let them guide you. We’ll determine the most suitable and appropriate lender for your circumstances. [See also: Bad Credit Mortgages | How Does a CCJ Affect Getting a Mortgage?]

Does it make a difference when applying for a mortgage if my company pays me a low salary but has strong profits?

No, it doesn’t ordinarily make a difference. If your company profits are strong, lenders can use those profits to assess affordability, even when you have a CCJ as a limited company director.

There are caveats though. It usually comes with specific deposit requirements. What you consider a “low salary” is also subjective. It depends on how much profit is within the business, how sustainable that profit is, how long the company has been trading and what else is on your credit profile.

Many limited company directors pay themselves a low salary for tax efficiency (often around the National Insurance threshold) and take the rest as dividends. Lenders are well aware of this structure and many have specific criteria for assessing it.

What deposit would a director with CCJs need to secure a mortgage?

If you’ve had a CCJ registered within the last six years, you’ll realistically need at least a 10% deposit for a reasonable range of options. There are lenders who will consider a 5% deposit with a CCJ, but the options are very limited and the interest rates will be higher because of the combination of a low deposit and adverse credit.

The exact requirement will be determined by the date the CCJ was registered, how much it was for, whether it’s been repaid, how long the company has been trading, how many directors there are, your profitability and your shareholding.

As a general rule, a bigger deposit is always better. You’ll get a better interest rate, you’re borrowing less money, and you’ll pay back less in interest over the life of the mortgage. So while 5% is technically possible, 10% is more realistic, and there’s a good chance you may need 15% or more depending on your credit history and the other factors that play into your application.

What can I do as a company director to strengthen my mortgage application with CCJs?

The most impactful thing you can do is pay off the CCJ if you can. A satisfied CCJ is treated far more favourably than an outstanding one.

Beyond that:

• If there are other adverse credit items on your file, try to satisfy those too
• Pay down other debts such as credit card balances where possible
• Save up a larger deposit, as every percentage point helps
• Make sure your company accounts and paperwork are fully up to date, because lenders need those to assess your company structure, profitability and income sustainability

A key element is demonstrating that you’re running a successful, sustainable business. All of those factors play into the decision.

How can a mortgage broker help a limited company director with a CCJ?

Limited company directors looking to get a mortgage with a CCJ often feel like it’s an uphill struggle. Company directors’ income is already seen as non-standard compared to someone who’s employed. Add adverse credit and CCJs into the mix, and it can feel like hitting a brick wall.

That may be the case with some high street lenders. But there are plenty of other options. If you have a 10% to 15% deposit, you’ve been trading for a couple of years, you have strong profits and you’ve been working to improve your credit profile, you may be surprised by the number of lenders willing to consider your application.

It’s also not forever. A CCJ drops off your credit file after six years, and at that point, we can look at moving you to a mainstream high street lender on a better deal. Get in touch to discuss your options or call us on 01623 375007.

Key Takeaways

• Lenders assess a limited company director’s CCJ based on when it was registered, the amount, and whether it has been repaid or is still active.
• A company’s strong trading history demonstrates affordability but won’t offset personal CCJs. Your personal credit history is what matters.
• Lenders use different methods for calculating affordability, including salary and dividends, retained profits, or net profit. Strong company profits can be used even if you draw a low salary.
• With a CCJ registered within the last six years, some lenders will consider a 5% deposit but options are very limited and rates higher. A 10% deposit opens up far more options, with 15% or more potentially required depending on the circumstances.
• To strengthen your application: pay off outstanding CCJs and other adverse credit, reduce debts, save a larger deposit, and ensure all company accounts are current.

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