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AIBU?

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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:
Bluntness100 · 01/11/2021 16:45

[quote stressingsusan]@Bluntness100 yes that's true but the sale of this house will pay off the remainder of the loan so hopefully (providing the house sells relatively quickly) it won't be a long term debt that we carry forward. [/quote]
Honestly that doesn’t make a difference op. Right now it’s a debt that’s owed and paid monthly for 400 a month, the fact you will likely pay it off some point next year is not relevant, here and now you don’t have rh money to pay it off,

This will all come down to affordability , and as they think right now you could not afford a mortgage that cost an extra 400 a month then they may decline on this basis, but as you’ve still got headroom it could go the other way

Have you informed your broker?

Original poster
stressingsusan · 01/11/2021 16:53

@Bluntness100 yes we have and we were told that providing the debt is gone by the time the mortgage repayments begin it shouldn't affect the application. I'm hoping that the house will have sold by then. If not I will have to make some sort of arrangement with family to cease payments for a few months or until the house does sell.

OP posts:
Igfdyjxzyjkv · 01/11/2021 17:56

But the debt won’t be gone by the time you start repayments? You said yourself there would be overlap. So why have you misrepresented to your broker that the debt will be cleared by then?

Igfdyjxzyjkv · 01/11/2021 17:58

The bank will likely seek evidence that the debt has been cleared before they will allow you to draw down so you may lose finance on the day of completion.

Bluntness100 · 01/11/2021 18:00

[quote stressingsusan]@Bluntness100 yes we have and we were told that providing the debt is gone by the time the mortgage repayments begin it shouldn't affect the application. I'm hoping that the house will have sold by then. If not I will have to make some sort of arrangement with family to cease payments for a few months or until the house does sell.
[/quote]
What! So your broker basically told you to lie and hide it?

Badgerloco · 01/11/2021 18:00

I have just had to advise a bank what two things were in a bank statement for a client. One was council tax and one was Camelot lottery. It’s fine to explain what you are paying and that it will be paid off when you complete. Lots of people have debts they will repay before / on completion.

neededafart · 01/11/2021 18:03

Can your family member do without the repayment for a month or 2.

I had a similar thing. I stopped paying for the couple of months and when it was questioned said it was a loan but it had been paid off.

Then restarted payments again on completion

Original poster
stressingsusan · 01/11/2021 18:11

@Bluntness100 why is it a lie? We quite possibly will have stopped paying the loan by the time the mortgage starts as my house should have sold by then and I can clear it.

There could potentially be an overlap if the house doesn't sell but my family member is happy to stop monthly payments if that's the case and just wait for the lump sum to come in.

OP posts:
Africa2go · 01/11/2021 19:04

OP in terms of your question to @Bluntness100, you were asked as part of your application what liabilities you have. You have omitted this loan so you have been untruthful about your position and its poor that your broker is condoning that. If it's going to be repaid out of the proceeds of sale, just set that out and let the lender consider the true position.

Igfdyjxzyjkv · 01/11/2021 19:48

@Africa2go

OP in terms of your question to *@Bluntness100*, you were asked as part of your application what liabilities you have. You have omitted this loan so you have been untruthful about your position and its poor that your broker is condoning that. If it's going to be repaid out of the proceeds of sale, just set that out and let the lender consider the true position.
Totally agree with this. You have made a legal declaration in submitting your application. You must correct the position, otherwise you may be found to have committed mortgage fraud which is extremely serious.
TotallySuper · 01/11/2021 20:44

@Badgerloco

I have just had to advise a bank what two things were in a bank statement for a client. One was council tax and one was Camelot lottery. It’s fine to explain what you are paying and that it will be paid off when you complete. Lots of people have debts they will repay before / on completion.
How odd they queried it when it would have clearly said lottery and London Borough (for example) council tax on the direct debit.
Bluntness100 · 01/11/2021 20:52

Op your house isn’t even on the market yet. How do you possibly think you will sell it and pay the loan off before you’ve even completed on this one?

Jasmine11 · 01/11/2021 21:10

I actually think you need a new broker if yours hasn't even bothered going through your bank statements and is encouraging you to lie. The mortgage application is supposed to be based on a snapshot of your financial situation now - not what you think/hope it will be at some point in the future..

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