to not pay off credit cards (mortgage related)?

[amadalily]

Hi all, I need to know if I'm being incredibly stupid.

DP and I are moving house and had to take out a bigger mortgage (90% LTV and 4 times our salaries).
My salary will double by the end of the year. Financially we are secure and will have no trouble paying off the mortgage repayments (400 a month each)

However, to get this mortgage our mortgage adviser said we'd pay off our credit card debt (£6k). But we don't want to and we can't.
Our debt is all on interest free (mortgage lender doesn't look at it like that) and will be paid in full when interest free period is over (still 2 years from now!).
Our savings will cover the stamp duty, lawyers fee, etc. the extra £14k on top of the deposit (from the sale of our current place).

We are quite financially switched on, DP is an economist and I'm a Chartered Accountant.

HOWEVER, what will happen if we don't pay off the cards? Mortgage adviser said they won't ask to see a £0 balance but we must do it before completion. So how does this work?

Help

Mortgage adviser also said
"you have to tell me that you're paying it off...they will not ask to see your credit cards with a £0 balance"

So your mortgage adviser is happy to encourage you to defraud your lender? I'd be looking for a new mortgage adviser!

How about paying it off with the stamp duty funds, then doing a money transfer back afterwards for the rest of the stamp duty? It's then paid off by the time the mortgage is released, as you have 28 days to pay the stamp duty.

Overall my savings outweigh credit card debt

Yes, but they're about to be used up in the purchase. And dont cover the purchase fees + credit card. It leaves you financially vulnerable once the purchase goes through.

Unless you're saying you will have remaining 6k in savings after purchase but want to keep it there due to interest payments? I would imagine, once the rest of your savings are gone, you won't get much interest on the 6k though. But is that what your saying?

Just pay them off. You’ve got the money in savings, it takes awhile to show on your credit report. I wouldn’t risk not getting a mortgage over moving £6k from your savings to your credit cards.

Afterwards you can spend on the cards and put the money into savings, and you can repay that £6k to your savings in no time.

Getting a mortgage is stressful. Just pay it.

Pay off the card and don’t book any more expensive holidays until you’ve built your saving back up again .

@just
this is what we'd love to do, however, from our previous experience we weren't allowed to complete without paying the stamp duty to our solicitor. Do you know what rights we have here are?

Simply you cannot afford this. Wait and save up 6k so you can afford to pay it all off plus stamp duty etc then move. If you can only afford the mortgage according to the lenders affordability rules by paying off the debt then you are already at the limit of your affordability. You can't afford this move unless you have the funds to clear the debt and cover stamp duty legal fees etc.

Or shop around and find a new lender who would/could lend you enough without you having to clear the credit card. But I imagine if you've seen a broker they've already considered more than one lender so this may not work.

It will be part of the mortgage conditions issued to your solicitor! You have to pay off the credit card debt if that is what you've said you'll do otherwise the Bank will not release the mortgage monies. You have tell the MA that you can't repay the cc debt and he has to advise the Bank of this fact so they can redo their figures and work out whether they will still lend to you. I've seen people scrabbling around borrowing every last penny from relatives when they've though like you that they could just not pay the cc debt back first.

We have a saying - "no fees, no keys" technically SDLT has to be paid within 30 days of the completion or there is an immediate £100 fixed penalty followed by a daily rate of interest AND the solicitor cannot register the house in your name without a valid SDLT 5 certificate which is a breach of your mortgage, therefore no solicitor worth their salt will put you at risk and complete without Stamp Duty being paid prior to completion - hope that helps understand the reasoning

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See the wording on your mortgage offer, some will say they expect cc to be paid off at completion, and others, where it impacts affordability will state 'paid off and evidenced' to either them or your solicitor prior to completion. Your plan will work if it's the first example not the second. Also, they don't mean paid off with another loan so swapping to another cc won't work.

OK hello, I'm back. Mortgage offer came through and it is CONFUSING.

Firstly it says 'must be paid when mortgage completes'
It lists what we have to pay off:

• a loan my DP has but will be paid off before we move anyway through it's normal monthly repayments
• my travelcard loan from employer (this doesn't hit my credit file and is only visible on payslips as they deduct it each month) this is normal where I work / London. HOWEVER, the employer is a random other bank to the one I actually work at e.g. it says to Barclays when I work at Goldman.
• A credit card debt with a bank that does not even exist (complete typos)
• A credit card debt that does exist but the wrong amount (it state approximate value under what it is).

SO this seems like the MA wrote notes of our debts and they just copied and pasted it?
Additionally, rang MA and he said we can't pay before funds are released and shouldn't as it has been agreed with NW that we will use the mortgage funds to pay the debt (this is not true but could be technically)

Also MA has said they absolutely will not run another credit check and has confirmed this with them.

So basically there is a special condition requesting they are lending on the assumption you will no longer have those unsecured debts post completion? if so then you are obliged to repay them, the adviser is right they probably will not check HOWEVER if there is ever an issue where you want to remortgage with same lender, refinance or cant make a mortgage payment they will check at that stage and then find you breached their terms at the time of the 1st application, again potentially, like my last message said, putting you in jeopardy for a potential mortgage fraud blacklist, it is just not worth the risk

propertyexpertadvi.wixsite.com/website

@sweet agreed it is not worth the risk but surely there is no breach of contract if it tells me to pay off a debt with a company that either doesn't exist or that I don't have (no debt with Barclays only with Goldman)

But you wouldn't sign an incorrect mortgage offer though, would you?

Or treat it like a pick and mix counter saying only the bits you like apply. Good luck with that approach with either the mortgage company or your professional body!

I hope this thread isn't real ...

if the debt no longer exists or did not exist then you really need to query this as to why it has come up in the first place as the lender if it comes up the future and the lender wants proof you cannot prove a negative and they will question why it was not raised to start with your broker really should be assisting you with this

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@amadalily I'm a qualified mortgage adviser and have been in the business for 6 years. If you don't pay off the debt when you've said you will, you are committing mortgage fraud and if the lender does a spot check, you may actually be declined for the borrowing. If you have a mortgage application declined then you have to disclose that any other time you apply for one in future.

The reason that it affects affordability so much is because the banks and building societies are trying to lend responsibly and ensure you can afford your payments. Either pay off the credit (with CASH, not moving it to another source of credit) or declare them as financial commitments. The company I work for do random spot checks to ensure debts are repaid prior to the mortgage advance being paid, it's not worth the risk.

@sass there's nothing to sign, still no forms and on the mortgage document we've received it says 'you don't need to sign anything'

God I am so bloody confused. I have told my MA about the mistakes but he doesn't seem like it matters.

@amadalily is a qualified mortgage adviser I am a qualified solicitor, specialising in conveyancing and property law both of us are advising you this is fraud and not worth the risk as you may be found out now or in the future if the debt does not exist the mortgage adviser should be rectifying the error, and if he seems bothered that is advice you are paying for, if the solicitor does their due-diligence correctly they will check - either way the advice is pay them I appreciate you say you are confused but I don't see how the advice can be conflicting, everyone on this site is advising you against taking the risk, if your broker feels otherwise then if you get caught the fault lies with you, not him, you have no right of redress so ultimately the decision is yours but i would not do it nor allow any of my clients to and i am sure that @amadalily would agree with me

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Good Lord you really haven't a clue bless you. Get a better mortgage broker.

@atb the patronising tone is unnecessary. No, I am pretty clueless about it all. I'm 24 , it's my second mortgage and the technicalities of wording are confusing. However, from a contract law perspective I know where my rights are.

It’s because now everything is done on affordability rather than a certain salary. Ie someone earning national minimum wage with no debt may have more disposable money than someone earning much more money who has a shit tonne of credit cards. They have become a lot more strict with this in the last couple of years.

Sorry if I’ve repeated what others have said, not read all the comments

And from a plain English POV, your MA is saying quite clearly that if you can't pay off those debts, then you fail the affordability criteria for the mortgage.

If you've been told to do it, then tough you have to. Can't just say no. Well you can, and they will say no to the money. Your choice.

I had to declare all my debts. Including credit card. But mine was 600 and was paid off before even the approval in principle was issued so there was no problem.
But! They took my other loan into an account and it lowered how much I could get because of monthly payments v wages. Even though that mortgage was nearly half my rent so i would actually be in plus🤷‍♀️

All banks are now trying their best to be really responsible lenders so they don't get lnaded with fines and lawsuits, which is annoying for some, but good thing for others.

Do not lie. Fraud is not a pretty thing to later try to get out off. If you can't understand something on papers ask your MA or solicitors to explain in layman's terms. That's what you are paying them for too.