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  • FIRST POST
    • d_seng
    • By d_seng 17th Aug 17, 4:40 PM
    • 16Posts
    • 1Thanks
    d_seng
    Credit card balance to be paid before re-mortgage completion
    • #1
    • 17th Aug 17, 4:40 PM
    Credit card balance to be paid before re-mortgage completion 17th Aug 17 at 4:40 PM
    Hi there,

    I have about 9k outstanding balance on a credit card, which is in the promotional period, and I don't have to pay anything other than the minimum balance for another 18 months or so.

    In my recent re-mortgage application, I declared this balance but I also mentioned that I will pay it off before the completion of the re-mortgage (which is to happen towards end of September).

    Before disbursing the funds to the solicitor, will my new mortgage lender (Virgin money) check if I have really have paid this balance off or will they take me on my face value?

    It's not that I don't have the cash, I just want to keep earning whatever interest I can on my money kept in an ISA account.

    Any thoughts will be much appreciated.
Page 1
    • benevs
    • By benevs 17th Aug 17, 4:47 PM
    • 47 Posts
    • 8 Thanks
    benevs
    • #2
    • 17th Aug 17, 4:47 PM
    • #2
    • 17th Aug 17, 4:47 PM
    I'm in a similar position.

    I did have money on a credit card, which I paid off before applying for a mortgage. I told them I had 0 balance on it. Problem is that it still shows on my credit report as having a balance, since apparently it takes 60 days to update or something!
    So far they haven't asked for proof that its been paid off and the mortgage has been approved subject to valuation
    • d_seng
    • By d_seng 17th Aug 17, 4:51 PM
    • 16 Posts
    • 1 Thanks
    d_seng
    • #3
    • 17th Aug 17, 4:51 PM
    • #3
    • 17th Aug 17, 4:51 PM
    I'm in a similar position.

    I did have money on a credit card, which I paid off before applying for a mortgage. I told them I had 0 balance on it. Problem is that it still shows on my credit report as having a balance, since apparently it takes 60 days to update or something!
    So far they haven't asked for proof that its been paid off and the mortgage has been approved subject to valuation
    Originally posted by benevs
    Hmm. My valuation and mortgage offer are done. The declaration on the mortgage application said that it will be paid off before completion...
    • benevs
    • By benevs 17th Aug 17, 5:08 PM
    • 47 Posts
    • 8 Thanks
    benevs
    • #4
    • 17th Aug 17, 5:08 PM
    • #4
    • 17th Aug 17, 5:08 PM
    No idea then, I'm expecting them to ask for proof that its been paid off before I get an offer....
    • Chappers27
    • By Chappers27 17th Aug 17, 5:11 PM
    • 70 Posts
    • 72 Thanks
    Chappers27
    • #5
    • 17th Aug 17, 5:11 PM
    • #5
    • 17th Aug 17, 5:11 PM
    I wouldnt worry about it. I dont think they check. They would have done an assessment of your ability to pay for the mortgage, and you passed. I presume you are going to pay it down eventually?
    • d_seng
    • By d_seng 17th Aug 17, 5:25 PM
    • 16 Posts
    • 1 Thanks
    d_seng
    • #6
    • 17th Aug 17, 5:25 PM
    • #6
    • 17th Aug 17, 5:25 PM
    I wouldnt worry about it. I dont think they check. They would have done an assessment of your ability to pay for the mortgage, and you passed. I presume you are going to pay it down eventually?
    Originally posted by Chappers27
    I think I passed the affordability assessment by a whisker because we just became a single earning household a couple of months ago. If I were to add the standard 3% of outstanding balance, I would have failed.

    In any case, I will keep the cash ready and in case there are any issues, I will pay off immediately and provide them the proof.

    And yes, I will pay off the balance eventually.
    • BachSoon
    • By BachSoon 17th Aug 17, 5:26 PM
    • 52 Posts
    • 109 Thanks
    BachSoon
    • #7
    • 17th Aug 17, 5:26 PM
    • #7
    • 17th Aug 17, 5:26 PM
    Mine checked and asked for a copy of the redemption letter.
    • d_seng
    • By d_seng 17th Aug 17, 5:29 PM
    • 16 Posts
    • 1 Thanks
    d_seng
    • #8
    • 17th Aug 17, 5:29 PM
    • #8
    • 17th Aug 17, 5:29 PM
    Mine checked and asked for a copy of the redemption letter.
    Originally posted by BachSoon
    What is a redemption letter?

    I was thinking of providing a screenshot of the payment, if needed.
    • BachSoon
    • By BachSoon 17th Aug 17, 5:40 PM
    • 52 Posts
    • 109 Thanks
    BachSoon
    • #9
    • 17th Aug 17, 5:40 PM
    • #9
    • 17th Aug 17, 5:40 PM
    The letter from the bank to say that it had been paid off.
    • Thrugelmir
    • By Thrugelmir 17th Aug 17, 6:12 PM
    • 56,252 Posts
    • 49,620 Thanks
    Thrugelmir
    What is a redemption letter?

    I was thinking of providing a screenshot of the payment, if needed.
    Originally posted by d_seng
    If it's a condition of the mortgage offer. The solicitor may be asked to confirm on behalf of the lender.

    .
    The declaration on the mortgage application said that it will be paid off before completion...
    That's what you said that you would do. So forms a contractual arrangement.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • d_seng
    • By d_seng 17th Aug 17, 7:56 PM
    • 16 Posts
    • 1 Thanks
    d_seng
    If it's a condition of the mortgage offer
    Originally posted by Thrugelmir
    It isn't a condition on my mortgage offer document though!
    • simondm
    • By simondm 17th Aug 17, 8:33 PM
    • 24 Posts
    • 19 Thanks
    simondm
    I was in a similar situation last year when remortgaging to Virgin. I went via an adviser and was required to supply a letter confirming the card would be paid off on completion, using the mortgage funds provided by Virgin (I was increasing my borrowing to fund another purchase and already had sufficient funds in my bank accounts to easily pay the card off beforehand, but it obviated the need to actually prove it was paid off prior to completion).
    • d_seng
    • By d_seng 5th Oct 17, 10:41 AM
    • 16 Posts
    • 1 Thanks
    d_seng
    Just to inform everyone, my remortgage was completed today, and I wasn't asked to provide proof of paying off my credit card balance (I didn't anyway!).

    So it could be that I met the affordability criteria even after adding the 3% on the o/s balance.
    • obay
    • By obay 5th Oct 17, 11:11 AM
    • 452 Posts
    • 329 Thanks
    obay
    Isn't that mortgage fraud though?
    1/12/16 - £152,599.00
    11/11/17 - £145,990.00
    Two Credit agreements to pay off - £13653! (inc interest).
    Sofa (DFS) (0%)£923/£923 - Paid off 7th November!
    Barclays Boiler (18.9%!)£400/£3021.36
    Barclays Car (5.99%)£0/£8,832.37
    • d_seng
    • By d_seng 5th Oct 17, 11:45 AM
    • 16 Posts
    • 1 Thanks
    d_seng
    Isn't that mortgage fraud though?
    Originally posted by obay
    I don't know but I don't think so. I had mentioned that the card balance is on a promotional rate with 18 months remaining and that I pay 1% minimum balance each month.

    If it were a concern they would have asked for proof. But then again that's my judgement.
    • obay
    • By obay 5th Oct 17, 12:50 PM
    • 452 Posts
    • 329 Thanks
    obay
    I don't know but I don't think so. I had mentioned that the card balance is on a promotional rate with 18 months remaining and that I pay 1% minimum balance each month.

    If it were a concern they would have asked for proof. But then again that's my judgement.
    Originally posted by d_seng
    It just sounds sketchy to me, you've declared you will pay it off but when you've come to remortgage, you haven't actually paid it off, so you've already broken the terms and conditions of the mortgage, thus they can take legal action, and maybe put you on the database for mortgage fraud?

    (don't take this as anything other then my own personal opinion... I'm not 100% sure about these things, but just making conversation, maybe a MA can come across and clear it up, as It'll be good to know in the future also).
    1/12/16 - £152,599.00
    11/11/17 - £145,990.00
    Two Credit agreements to pay off - £13653! (inc interest).
    Sofa (DFS) (0%)£923/£923 - Paid off 7th November!
    Barclays Boiler (18.9%!)£400/£3021.36
    Barclays Car (5.99%)£0/£8,832.37
    • csgohan4
    • By csgohan4 5th Oct 17, 5:16 PM
    • 4,020 Posts
    • 2,499 Thanks
    csgohan4
    I wouldnt worry about it. I dont think they check. They would have done an assessment of your ability to pay for the mortgage, and you passed. I presume you are going to pay it down eventually?
    Originally posted by Chappers27


    Above is bad advice, you don't presume something when it is on an offer letter. You don't presume you will be paid X when it says Y on the contract, if you do you only have yourself to blame when the lender recalls the loan or puts you on the mortgage fraud register.


    You signed and agreed to certain conditions, you stick to it, otherwise you have no way to defend yourself in court. What a way to go about life isn't ? breaking contractual promises and it 'should' be fine.
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
    • kingstreet
    • By kingstreet 5th Oct 17, 5:23 PM
    • 32,391 Posts
    • 17,394 Thanks
    kingstreet
    If you say you will repay a debt "on or before completion" most lenders do not include its cost in mortgage affordability.

    Some make further enquiries on this; some don't.

    There are a couple of lenders who trust no-one and 'tax' you the cost even if you say you'll repay because people often fail to do what they say.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, 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. Please do not send PMs asking for one-to-one-advice, or representation.
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