My friend can’t get a mortgage due to a parking fine. What should he do?

My friend can’t get a mortgage due to a parking fine. What should he do?

I have a young friend in his 20s to whom I give occasional basic financial advice – whether his tax code is right, whether a car loan he is thinking about is a good deal and so on. I can usually answer most of his questions as I know his situation well but I have come across one where I am not sure what the best advice to give him would be.

He acquired a county court judgment (CCJ) in rather frustrating circumstances last January. It was a simple parking ticket where the paperwork was sent to an old address and he had been relying on his old housemates to send on his post to him. The first he heard about it was after the CCJ had already happened. He paid the small debt of £265 to the debt recovery company within 24 hours, but now has a CCJ on his credit record. My understanding is that it will be there until January 2025.

In a few months’ time, he would like to buy a property with his girlfriend, who no longer wants to rent and has a stable teaching job. One option is to purchase a property in her name until the CCJ drops off, but it would limit what they could buy.

I have suggested going through a broker to find a mortgage rather than applying directly to lenders, but it brings up a query about a notice of correction. If I help him to write one, it may assist him in his application for a mortgage, although I am not sure how much attention is paid to them.

Would it be better not to write a notice of correction, given the small debt that was owed, so applications can be assessed automatically rather than having to be read by a person? His credit history is fine otherwise, with no credit card debt.

Will the fact the CCJ is for a relatively small amount mean it is not as big a blight as a larger one would be?

David Hollingworth
Thu, 05/07/2020 – 17:22

From
BH/Rushden

A notice of correction allows you to put a note on your credit file to explain any circumstances that resulted in an entry being made. That would allow the reasons for the late payment and consequent CCJ to be noted on the file. Lenders would then have to review the notice which may take it out of a more automated process without resulting in any real benefit. Although lenders should review the notice, it does not mean that it would make any difference to the ultimate decision.

In this case, the mix-up resulted from the error of not amending the registration address of the car – a harsh reminder of how important it is to keep correspondence addresses updated. While a notice of correction should not be viewed negatively at all, it may have limited impact on the success of a mortgage application.

Talking to a mortgage adviser initially would be a good step as they will be able to run through the individual circumstances as a whole. That should help establish whether an application stands a chance of being successful. Having a strong credit score could see the application pass a lender’s requirements in any case.

Making sure that the credit file correctly shows that the CCJ is ‘satisfied’, or paid off, is important and the greater amount of daylight between the CCJ and the application, the more likely a lender would consider it. 

If the mainstream lenders will not take it on, then there are specialist lenders that will be able to consider the application although that may carry a slightly higher interest rate.

David Hollingworth is a mortgage broker at London and Country Mortgages.

Do you have a money question for our panel of experts?

At Moneywise, we have a panel of top experts to help with your money and investing questions. If you have a tax issue that’s keeping you awake at night, a question about investing that you’ve always wondered but been too shy to ask, or even need a full money makeover for free, we’d love to hear from you.

If you have been treated unfairly by a firm send the details to Moneywise’s Fight for your Rights and we could take up the fight for you.

Email fightback@moneywise.co.uk

If you have a question about your investments or investing in general, put it to our Investment Doctor.

Email editor@moneywise.co.uk

If you have a question about your personal finances – anything from tax to state pensions, inheritance tax, property sales and more – write to our Ask the experts panel.

Email advice@moneywise.co.uk

Would you like a full money makeover? We will arrange a free one-to-one meeting for you with an FCA-regulated independent financial adviser worth over £2,000.

See Moneywise.co.uk/money-makeover for more details.

OneSite Article
1e998117-d81a-4920-8f91-ae5bb3d617d9

Syndicate to OneSite
On

Queued for syndication
Off

Bank of England warns of coming recession – what does this mean for your money?

Bank of England warns of coming recession – what does this mean for your money?

Central bank predicts a “very sharp fall in UK GDP in 2020

Brean Horne
Thu, 05/07/2020 – 12:38

Image

The UK economy could be heading for the worst recession on record due to the coronavirus pandemic, the Bank of England (BoE) warns.

It forecasts that the UK economy could shrink by 14% this year alone if lockdown measures are phased out from June.

A statement from the BoE says: “The spread of Covid-19 and the measures to contain it are having a significant impact on the United Kingdom and many countries around the world. 

“The unprecedented situation means that the outlook for the UK and global economies is unusually uncertain. It will depend critically on the evolution of the pandemic, and how governments, households and businesses respond to it.”

What does this mean for savers and borrowers?

Savers already face a tough time as banks have been quick to pass on the BoE’s March cut to base rate by slashing interest on savings accounts.  

Kevin Brown, savings specialist at Scottish Friendly, says: “Markets have largely responded to the crisis already and much of this fresh economic data is already priced in. It is impossible to predict the bottom, but one thing’s for sure, savers won’t find succour in a savings account paying 0.5% interest. 

“Many high street banks, building societies and challenger banks are cutting rates but there can still be ways to generate above inflation returns by exploring alternatives such as regular savings accounts, longer fixed-rate Isas and stocks and shares.”

Low interest rates tend to benefit borrowers as they make the cost of taking out a loan cheaper.

But experts warn that there has been little relief for borrowers so far.

Laura Suter, personal finance analyst at investment platform AJ Bell: “Banks and building societies have been quick to slash rates, but so far there has been little respite for borrowers.

With more people taking on more debt in order to get through the current crisis, many will be hoping that sustained low interest rates will provide some breathing space for those with debt.”

What about investors?

Investors can help recession-proof their portfolio by making sure they have at least three months of salary in cash, according to Myron Jobson, personal finance campaigner at Interactive Investor (ii), which owns Moneywise.

Jobson says: “Historically, it’s often said that three months salary is a fair rule of thumb for an emergency cash safety net. That will be a tough challenge for many of us at the best of times. But given what we been through, many people will want to double that, even amid paltry savings rates.”

Having a global, balanced portfolio can also help protect your investments from the ravages of a recession.

Picking defensive stocks might also help your portfolio weather a downturn, according to Richard Hunter, head of markets at ii.

He says this is because all defensive stocks produce something we always need as consumers despite the coronavirus outbreak, such as utilities, pharmaceuticals or supermarket products.

OneSite Article
386386b0-9803-49c9-a128-67475dea597f

Syndicate to OneSite
On

Queued for syndication
Off