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Original poster

Should I have declared this?

113 replies

stressingsusan · 31/10/2021 21:22

Dp and I currently going through a mortgage application for our dream home. Provided wage slips, lots of other information and it's all been approved.

I have a loan between myself and a family member that I pay back monthly. It's about £400 a month. I didn't declare this on the application because firstly it's a private loan between family and there's no record of it. And also because when we move and our current house sells I will be able to pay them back in a lump sum so in theory it won't affect our mortgage repayments anyway.

Our advisor recently mentioned I need to provide a bank statement and I'm now worried that this payment will show up and be questioned. Should I have declared this earlier on? Will it affect the application if it comes out? I'm really worried now.

OP posts:
Drywhitefruitycidergin · 31/10/2021 22:08

Hmmm my friend recently got a a query relating to a go henry payment to my daughter as she said she hadn't got any dependents so I think they look quite closely at bank statement transactions.

whynotwhatknot · 31/10/2021 22:09

It wont go through without having seen the bank statments-even 20 years ago when i bought this was the case

you would have had an offer in principle subect to checks

Sparklesocks · 31/10/2021 22:10

Thats not correct you're confusing agreement in principle with a full mortgage offer.

That’s the info I had on mine ¯\(ツ)/¯

Jasmine11 · 31/10/2021 22:11

Your broker doesn't sound that great tbh, our one went through 3 months of our bank statements and absolutely scrutinised them and wanted to know what every regular payment was for before he even applied for our mortgage. A £400 per month undeclared regular payment is going to cause massive alarm bells I would have thought.

Original poster
stressingsusan · 31/10/2021 22:14

The last thing our advisor said to me was that the only thing that would stop the mortgage going through now would be if the house valuations came back wrong - so if the bank deem the property to be worth significantly less than what we are wanting to pay for it.

We have done our sums. We know that we can afford the repayments even with the extra loan money on top. And we had a third of the asking price to put down as a deposit. So in theory we are in a fairly strong position but im just worried that the bank will withdraw or change the offer if this loan comes to light.

OP posts:
BigcatLittlecat · 31/10/2021 22:15

We've just got a mortgage and they didn't look at our bank statements. Just wanted 3 pay slips. It was with the Halifax.

jiskoot · 31/10/2021 22:15

I used to work for a lender and the illustration just details what mortgage product you've requested, how much your borrowing etc, it's not a mortgage offer. Sounds like you've just had an agreement in principle and they're doing all the pre offee checks. We used to ask for bank statements and this kind a payment would be picked up and questioned but you should just be able to say you're paying it off with funds on completion. You can also say that's why it wasn't declared, because it'll be paid off in full on completion with your own funds. Shouldn't be a problem Smile

RitaTheBeater · 31/10/2021 22:16

We were asked about payments to the cinema on our bank statements. We had a payment of about £130 one month and then a similar one the next month as two dc both opted for a cinema 'party' for their birthdays which are a month apart. They wanted to know if we had a unsustainable cinema addiction.

Original poster
stressingsusan · 31/10/2021 22:19

At no point so far have they even asked for bank statements. It was mentioned in the last meeting but literally as a passing comment not a formal, urgent request! Dh hasn't had to provide his at all. It did seem quite odd to me.

But they have had 3 months worth of pay slips and asked a lot about things such as our car finance arrangements etc. Credit checks have been passed so would that flag up any loans?

OP posts:
Morechocmorechoc · 31/10/2021 22:23

This will go against you, so personally I would say that was the last payment which is why you didn't mention it as it is paid off now. Any monthly outgoing has to be deducted from they can lend (usually annual amount x 4 or 5). Its a non issue for you to pay it off so don't give the bank a reason to deduct it

GoldenElephant · 31/10/2021 22:27

If the house valuation hasn’t been done yet then you don’t have a mortgage offer. The bank will want to see three months’ statements.

RazzleTitz · 31/10/2021 22:30

@stressingsusan

The last thing our advisor said to me was that the only thing that would stop the mortgage going through now would be if the house valuations came back wrong - so if the bank deem the property to be worth significantly less than what we are wanting to pay for it.

We have done our sums. We know that we can afford the repayments even with the extra loan money on top. And we had a third of the asking price to put down as a deposit. So in theory we are in a fairly strong position but im just worried that the bank will withdraw or change the offer if this loan comes to light.

The broker has said this assuming that you have told them everything. Perhaps call them tomorrow and explain it will be cleared once your house is sold and see what they say. The bank may want to see proof that the debt has been settled. Might be worth speaking to your solicitor to see if they have any experience with informal arrangements like this, how you might provide proof to the bank once settled and what the process would be from their perspective. (Would your solicitor need to see the payment and obtain signatures) and if so would they charge a fee for overseeing?

When we sold and bought we left the funds with the solicitor between selling and completion, (there was a 7ish week gap) the solicitor looked after everything, transferred the deposit, paid stamp duty, estate agents fee’s, took their fee and gave us the change, it might be that they could arrange payment to your family member, obtain signatures and confirm to the bank. Different banks may have different criteria but worth asking instead of worrying, it’s a stressful time as it is moving house.

NauseousNancy · 31/10/2021 22:32

Our broker went through everything on our statements - questioned every regular payment we hadn’t declared.

Even the £22 a month direct debit for baby classes!

Igfdyjxzyjkv · 31/10/2021 22:33

You have made a false declaration. It is entirely irrelevant that the loan will be paid off.

MintMatchmaker · 31/10/2021 22:34

I would cancel the direct debit and ask the family member if you can stop paying for now and then settle in full as you intended to do.

Then, if it is raised (some brokers ask for a bank statement as a matter of course, not because the lender has requested them) you can legitimately say that you are no longer making monthly payments.

You do not have mortgage offer yet. Your formal mortgage offer will only be issued when all checks and an acceptable valuation on a property have taken place. An illustration is exactly that, it shows you what your mortgage would look like if it were granted.

Igfdyjxzyjkv · 31/10/2021 22:34

@Morechocmorechoc

This will go against you, so personally I would say that was the last payment which is why you didn't mention it as it is paid off now. Any monthly outgoing has to be deducted from they can lend (usually annual amount x 4 or 5). Its a non issue for you to pay it off so don't give the bank a reason to deduct it
Don’t tell another lie
MintMatchmaker · 31/10/2021 22:36

Our lender only wanted details of any finance that wouldn't be settled on or by completion.

Therefore it is not a give that the OP has made a false declaration.

TotallySuper · 31/10/2021 22:36

@stressingsusan

At no point so far have they even asked for bank statements. It was mentioned in the last meeting but literally as a passing comment not a formal, urgent request! Dh hasn't had to provide his at all. It did seem quite odd to me.

But they have had 3 months worth of pay slips and asked a lot about things such as our car finance arrangements etc. Credit checks have been passed so would that flag up any loans?

You really just need to speak to your broker. PP is right - you don't get a mortgage offer until the valuations are done. Just speak to your broker as you're getting lots of mis information on here.
MargaretThursday · 31/10/2021 22:37

Since it'll be gone before you start making the new mortgage payments its irrelevant.

But they've only got the Op's word for it that it will be gone by then.

Op Hopefully they'll not worry about it, but if they ask then be honest.

MargaretThursday · 31/10/2021 22:38

This reply has been deleted

Message withdrawn - posted on wrong thread.

Horseradish01 · 31/10/2021 22:39

Don’t overthink it, it’ll be fine. If they question it (which is unlikely at this stage), let them know it isn’t a formal arrangement and it’s paid off before the new mortgage starts hence not declaring it.

Fabvegetablegrower · 31/10/2021 22:40

I think the mortgage lender will pick up this payment on your bank statement if they are doing there job properly. It's better to be upfront and let them know the situation. As it's going to be paid off it won't affect their decision but you're not being entirely truthful.

MargaretThursday · 31/10/2021 22:40

Oops wrong thread Grin Reported

Igfdyjxzyjkv · 31/10/2021 22:40

@stressingsusan

The last thing our advisor said to me was that the only thing that would stop the mortgage going through now would be if the house valuations came back wrong - so if the bank deem the property to be worth significantly less than what we are wanting to pay for it.

We have done our sums. We know that we can afford the repayments even with the extra loan money on top. And we had a third of the asking price to put down as a deposit. So in theory we are in a fairly strong position but im just worried that the bank will withdraw or change the offer if this loan comes to light.

You said that the loan will be paid off when you sell your current house but from this is sounds like the loan repayment will overlap with your new mortgage payments. Which is it?
Basically, you have decide to assess your own affordability and not provide the full information to the lender (who is giving you funds) to enable them to do so. The bank will entirely disregard the fact that you think you can repay it on sale of your current house (if that is true) because they will have no way to enforce it. They will simply focus on the fact that you did not disclose a substantial financial commitment, and therefore signed a false declaration
Original poster
stressingsusan · 31/10/2021 22:42

Having spoken to dh they have access to all of his statements and activity already as he banks with them. However he is the main earner (earns 3 x more than me). As yet I haven't been formally asked to produce bank statements.

I'm wondering why solicitors have been instructed if so much is still pending?

OP posts: