Credit cards - need to declare?

scotslad1983 · 6 January 2007 at 10:28AM

Hello all,

I have a problem. Between the ages of 18 and 21 I racked up £12,000 on credit cards, mostly due to spending outwith my means. I spoke to my parents about it and my Dad grudgingly agreed to pay £10,000 of the debt back, and gave me a low interest to pay him back at, I think it was 5% APR, and I pay the debt back at £300 a month, plus my £200 digs.

Anyway, I've only two more months to pay of this debt back to my Dad, but have been a right p**ck

and racked my £2,000 up to just over £7,500, still on credit cards. I have a good salary which is about £20k a year, however don't have enough money each month to pay more than the minimum payments (although I have never missed a payment), mainly because of my boredom sitting in my parents’ house! So I go out, and spend far too much doing so.

My problem is that after these two months, my Dad is going to help me get a mortgage, giving or lending me £25k towards a mortgage, however will hit the roof if he finds out I’ve got credit card debt again. When I get my own place, I’ll have added bills etc, but have calculated using the budget that I should be able to live quite comfortably within my means after moving out, and once I can start transferring debts to 0% cards etc, without my Dad getting suspicious that I’m borrowing or taking out new cards.

What I was wondering was, is it possible to not declare my debt to my mortgage lenders? My Dad will probably want to help me go through the mortgage process, and will see me putting down amounts of debt if I do tell the truth.

emg · 6 January 2007 at 10:41AM

I had a bit of credit card debt when I first applied for my mortgage (it's all gone now, yay!). I didnt mention it as it was reasonably small by then and it would only have come up when we were talking about monthly outgoings really. I did have to give the broker 3 months worth of bank statements though so I think he would have spotted the monthly payments if they were huge.

Ian_W · 6 January 2007 at 10:46AM

scotslad1983 wrote:

What I was wondering was, is it possible to not declare my debt to my mortgage lenders? My Dad will probably want to help me go through the mortgage process, and will see me putting down amounts of debt if I do tell the truth.

Yep, it is possible BUT would be bordering on mortgage fraud. However, the lenders will conduct credit checks which probably reveal your credit card debts and probably result in your application being rejected because you've lied to them.

What is better with your dad? Coming clean now or him finding out you've been refused a mortgage because of debts you've concealed from him? Your call - but if I was your dad I know which I would prefer.

TBH a mortgage is a huge commitment and if you default on it your credit history will be ruined for years. Clear your debts first and prove to yourself and your dad that you can live within your means before taking it on.
BoL.

arthur_dent_2 · 6 January 2007 at 11:08AM

Ian_W wrote:

. Clear your debts first and prove to yourself and your dad that you can live within your means before taking it on.
BoL.

I hate to say this but I completely agree with the above if you can't live within your means whilst paying your parents the rent you could never manage to do it in a mortgaged property.

Also it is no less boring in your own house without money than it is at your parents house with a small leftover income.

Mrs_Optimist · 6 January 2007 at 11:40AM

Agree with the other posts I'm afraid. Are you REALLY sure that getting a mortgage is a good idea, especially when you are struggling now? With a ortgage comes other bills which you don't have to pay at the moment. Get yourself sorted out with the credit cards first. Also if I were your dad and I knew that you had racked up further debt after I had helped you out of the last lot, although I would want to know about it, I would be very reluctant to help you out with a mortgage deposit etc, since you have shown that you cannot handle your finances.

Sorry if this sounds harsh and I really dont mean to sound unhelpful, but I am looking at it from your dads point of view.

Madjock · 6 January 2007 at 1:52PM

The credit card will absolutely come up on the credit search, and it will have an effect on what you can borrow.

UK007BullDog · 6 January 2007 at 7:56PM

One way around it is to get a mortgage where part of the loan will cover the credit cards and then you will have to stop using them.

As mentioned before you will have lots of costs coming your way and if you cannot handle your money whilst still living very very cheaply at home, I would see you as a prime candidate for a repossession.

I suggest you try yourself renting a one bedroom flat and see how it goes. This gives you time to pay off your debts and getting a feel of paying your own way. And it is not dead money renting, you are going to learn first of all how to live by yourself. Mortgage or renting, you will have a lot less money than living with parents so you really need to get a grip of your spending. Cut up your cards!

Bills living alone:

Gas
Water
electricity
Council Tax
Telephone
Internet
Mobile
TV Licence
Mortgage or Rent
Food
Clothes
Transport costs
Entertainment costs/Going out
Insurances
Service charges/Ground rent if property leasehold owner
Furniture

Any debts you have need to be repaid

If you have a car:
Road tax
Insurance
Fuel
Maintenance

If you omit your cards on the application they will find out and then they will start digging what else you omitted to tell them. The credit check will reveal your cards.

Tell your dad you will start looking for a property and then whilst paying of your cards in earnest be very picky about the property, which will stretch the time frame to pay your £7,500 off.
I guess your dad thinks it is time for you to leave the nest and for you to act responsibly and start standing on your own two feet. Your parents also have a right to have a life without adult children hanging about and living on their income.

Tustastic · 6 January 2007 at 8:13PM

I agree with UK007BullDog; move out into a rented flat and get used to paying bills. IMO it would be more fun to move into a shared flat or house with built-in company and playmates. BTW, those 0% cards are not eternal - you would need to be paying chunks off them every month so the debt is gone by the time the 0% expires.
Remember, this site is not about cutting back, it's about making the most of your money. If you did a spending diary for the rest of this month, you might find that you could have bought several boys toys AND paid off some of your credit card debts for what you have wasted on lattes, fast food, cabs etc. Your choice.:)

Rachman_2 · 6 January 2007 at 8:23PM

Presuming you are borrowing up to your limit, I'd be taking a long honest look at myself.

Your dad was already stood you nearly 40K (with the extra interest you'd have had to pay) (OK, you've paid him back presumably about £12K) - yet, you have seemingly learned nothing. I'd go mental if I was your father, not that you had the debt, but that you did not talk to him about it and were prepared to deceive me and risk my £25K if (or being frank from what you've posted, more likely when) you default.

More to the point and without going to town, what happens when (which seems more likely than if) you end up behind with the mortgage money ? How will you fix that ? The right answer is presumably, it won't get there, I've learned my lesson, but only one person knows the answer to that.....

And life is a lot worse sitting in your own place unable to afford to go out, and you can't even raid the fridge..... and knowing that your Dad's £25K is at risk.

clutton_2 · 7 January 2007 at 4:35PM

i wholeheartedly agree with everything that has been said up to now - do not get a mortgage until you can handle money - if you are repossessed it will affect your life for 6 years afterwards - during that 6 years you will be allowed NO credit whatsoever - even a new mobile phone will be denied you - - think VERY carefully about this.

the fact that so many independent people on here are telling you the same thing (even tho its probably not what you want to hear) must tell you something .....

how old are you by the way ?

good luck

scotslad1983 · 17 January 2007 at 6:57PM

Thanks all for replying, even though none contained the answer I wanted to hear. But perhaps me coming on here, was because I really knew the answer.

However, just a few points ... although I don't think these will sway anyone!

Firstly, I'm 23.

My basic salary is £21500, although I work compulsory overtime of about an extra £2000 per year. Obviously this can't be counted into my mortgage though.

I won't be borrowing the full amount available - I think thats about £107500 (5x basic salary), but I'll only be borrowing around £60000-£65000, plus fees, so I was hoping if I don't declare, or if I do but keep it secret from my Dad, it shouldn't affect me getting the mortgage.

I don't overspend on many things, I've got the Money Diet book, and Thrifty Ways, so have cut back majorly on a lot of things. My main spending comes from going out to see friends, which is usually to the pub or clubbing etc, and can be very expensive nights. My reasoning that I would spend less, is that I'd have friends coming to my house etc, and socialising inside would cost a whole lot less than it does in the expensive parts of Edinburgh I go out in!

Plus - I have not spent on my credit card for the best bit of a year, just paying minimum payments back. I've totalled up the credit card debt which comes to £6600.

I've used Martin's Budget to calculate how much I would spend, and my mortgage payments would be just over £200 cheaper than the payments I currently pay my Dad, so this would cover some of my extra outgoings.

But I'm unsure any of this will change anybody's opinion! On a positive note, I am being very picky when it comes to buying my property, and it is taking time. Getting slightly restless now though, as I think this is my ninth week of looking, and have found somewhere I do really like...

Thanks again to all who responded, and if I have answered any loose ends, I hope you respond again.

Credit cards - need to declare?

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