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    • fatbadger2
    • By fatbadger2 11th Oct 16, 11:17 AM
    • 180Posts
    • 23Thanks
    fatbadger2
    Mortgage co asking for reason for outstanding loan
    • #1
    • 11th Oct 16, 11:17 AM
    Mortgage co asking for reason for outstanding loan 11th Oct 16 at 11:17 AM
    Hi all - Hope someone can help me be less paranoid . Out prospective mortgage company would like to know the reason I took out a 10K loan 3 years ago. I am worried in that I can't remember what the reason was (well I know I needed the money but can't remember if I told them it was for a car, building work etc). If I just say it was for a car, would the credit check thing have a record of what I originally wrote down (i.e I might have said building work) or is this just a formality that they have to ask for?

    Cheers!
Page 1
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 11:26 AM
    • 51,207 Posts
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    Thrugelmir
    • #2
    • 11th Oct 16, 11:26 AM
    • #2
    • 11th Oct 16, 11:26 AM
    Is it possible that you used the money to consolidate debt? Lenders can view your last 72 months of credit history. So can see usage trends etc. Maybe worth getting a copy of your credit report ( £2 statutory, don't subscribe ) from Experian and seeing it what it contains.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • benten69
    • By benten69 11th Oct 16, 11:33 AM
    • 226 Posts
    • 1,243 Thanks
    benten69
    • #3
    • 11th Oct 16, 11:33 AM
    • #3
    • 11th Oct 16, 11:33 AM
    Do you still have the paperwork for the loan? That should have details on it, and you can just tell them what it says. However I know for sure if I borrowed £10k just 3 years ago, I would know what it was for to this day, not like it was 30 years ago.

    Is the loan paid off? I'm assuming it's not, in which case can you really not remember what you spent that £10k on? If you genuinely can't remember where you spent £10k just 3 years ago, it won't look good to someone trying to lend you money.

    I don't THINK a credit check will reveal details of what the loan to that extent, but if you have nothing to hide, then just dig out the paperwork and give them the honest answer.

    As above though, your credit file can show that you had say £9500 in debt to 5 lenders, then all of a sudden all 5 lenders got paid off and you had 1 single £10K debt. That would scream "consolidation loan" to anyone looking at your credit file.
    SPC9 #408 - £200.39 | SPC10 #408 - £95.69
    3-6 Month Emergency Fund Challenge #62 - 53% Complete
    Mortgage Sept '15: £161,250 | Oct '16: £157,050.37

    • David White
    • By David White 11th Oct 16, 11:39 AM
    • 664 Posts
    • 291 Thanks
    David White
    • #4
    • 11th Oct 16, 11:39 AM
    • #4
    • 11th Oct 16, 11:39 AM
    If it wasn't for a car don't tell them that it was as if they're the kind of lender to scrutinise like that they would probably ask for info regarding the purchase.

    Go into the bank or onto your online banking and find the £10k going into your account and then trace the money going out to see what you did with it.

    Out of interest, how much of a deposit are you putting down for this mortgage.....?
    I am a Mortgage Broker
    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it.
    This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • zx81
    • By zx81 11th Oct 16, 11:40 AM
    • 9,319 Posts
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    zx81
    • #5
    • 11th Oct 16, 11:40 AM
    • #5
    • 11th Oct 16, 11:40 AM
    Could it have been for medical treatment for memory loss?
    • JimmyTheWig
    • By JimmyTheWig 11th Oct 16, 11:40 AM
    • 11,462 Posts
    • 11,139 Thanks
    JimmyTheWig
    • #6
    • 11th Oct 16, 11:40 AM
    • #6
    • 11th Oct 16, 11:40 AM
    Are you saying that you can't remember what you used the loan for?
    Or are you saying that there is a reasonable chance that you used the loan for a different reason than you told the lender when you borrowed it?

    They won't have the reason for the loan on your credit report. But if the banks are linked in any way then they will have it in their internal systems.

    If you answer to the best of your ability then that's fine. But if not then its mortgage fraud.
    • fatbadger2
    • By fatbadger2 11th Oct 16, 12:16 PM
    • 180 Posts
    • 23 Thanks
    fatbadger2
    • #7
    • 11th Oct 16, 12:16 PM
    memory loss
    • #7
    • 11th Oct 16, 12:16 PM
    No, not memory loss, but application loss. I know what I needed it for: some consolidation, a car, and a wall and carpet, then a holiday! But I probably told the bank it was something simple like a car, or the building work. I'm pretty sure I wouldn't have mentioned consolidation and the long list though. It was 10K about 3.5 years ago and there is 2k left to go. My deposit is just over 25 %. My credit rating is well above average according to clearscore. Thanks all.
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 12:27 PM
    • 51,207 Posts
    • 42,984 Thanks
    Thrugelmir
    • #8
    • 11th Oct 16, 12:27 PM
    • #8
    • 11th Oct 16, 12:27 PM
    Do you currently owe money on credit cards or other forms of finance agreement, other than the loan.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • fatbadger2
    • By fatbadger2 11th Oct 16, 12:35 PM
    • 180 Posts
    • 23 Thanks
    fatbadger2
    • #9
    • 11th Oct 16, 12:35 PM
    • #9
    • 11th Oct 16, 12:35 PM
    Do you currently owe money on credit cards or other forms of finance agreement, other than the loan.
    Originally posted by Thrugelmir
    one card with a 0% balance of 9k. My salary is 40k and I have one house already with a LtV mortgage of about 60% on it... this new one is a BtL application.
    • JimmyTheWig
    • By JimmyTheWig 11th Oct 16, 12:36 PM
    • 11,462 Posts
    • 11,139 Thanks
    JimmyTheWig
    How do you have to answer them?
    Is it a form where you have to tick the appropriate box(es)?
    Or do you need to write a sentance?

    My thinking is that you should write
    "I used the loan for some building work, a car, some consolidation and a holiday."

    The benefit of that is that it is true.

    As far as I am aware there is nothing to say that you have to use a loan for the purpose that you borrow it for. But you do have to be honest about the reason for borrowing it.
    Lets say that you want to buy a car for £10k. You borrow the money from the bank. The bank ask why you want to borrow it. You truthfully answer to buy a car. They give you the money. Before you buy a car you hear that a relative who lives on the other side of the world is dying. You decide not to buy the car but to go and visit them with the money instead. There's nothing wrong with that.
    What would be wrong is telling them you wanted to buy a car, because you thought it would help you get the loan, when you knew all along you were going to use the money to see a relative.

    Sounds like you told a small lie to get the loan.
    Don't make things worse by lying more now.
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 1:10 PM
    • 51,207 Posts
    • 42,984 Thanks
    Thrugelmir
    one card with a 0% balance of 9k.
    Originally posted by fatbadger2
    Only an assumption but my take (with a lenders limited eyes). From your credit history 3 years ago you borrowed £10k which appears to be for debt consolidation. Since then you have amassed another £9k of debt. The lender can see its a promotional balance transfer, and that it cleared other debts. So the current position is that you now £12k of debt. Over the past 3 years you've effectively overspent by £2k.

    The concern for the lender is then three fold. One that the deposit for the BTL is borrowed. Two is that you will continue to overspend on your lifestyle and get further into debt in the years to come. Three is that your ability to suffer any form financial distress in letting a property is severely restricted.

    Lenders now have a duty of care and responsibility. They won't underwrite regulated consumer business at any cost. Simply not worth the trouble when the regulators come to visit them.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • fatbadger2
    • By fatbadger2 11th Oct 16, 1:44 PM
    • 180 Posts
    • 23 Thanks
    fatbadger2
    Only an assumption but my take (with a lenders limited eyes). From your credit history 3 years ago you borrowed £10k which appears to be for debt consolidation. Since then you have amassed another £9k of debt. The lender can see its a promotional balance transfer, and that it cleared other debts. So the current position is that you now £12k of debt. Over the past 3 years you've effectively overspent by £2k.

    The concern for the lender is then three fold. One that the deposit for the BTL is borrowed.
    Originally posted by Thrugelmir
    No, my unsecured debt has gone down steadily (well up and down, but heading down overall) and my deposit could be all cash (and pay off the card) but I would rather leave the card there as I think it's a great deal (0% for nearly 3 years with Virgin, thanks to MMSE). The card consolidated about 3 previous 0% cards that were approaching end of promotional offer. The loan has an early repayment penalty so I have to leave that.

    So, we collectively think (I won't sue!) that just saying it was for a car, building and debt consolidation is better than just saying, eg bought a car??
    Thanks
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 3:36 PM
    • 51,207 Posts
    • 42,984 Thanks
    Thrugelmir

    So, we collectively think (I won't sue!) that just saying it was for a car, building and debt consolidation is better than just saying, eg bought a car??
    Thanks
    Originally posted by fatbadger2
    Entirely up to you what you say. Likewise the underwriter at the lender will take a view and make a decision in line with internal policy.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • amnblog
    • By amnblog 11th Oct 16, 3:47 PM
    • 8,840 Posts
    • 3,361 Thanks
    amnblog
    They probably don't want it to be your 'deposit money'.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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