Ahhh help really worried now

rach83

Basically I am in the throws of obtaining a mortgage from the C&G. They have picked up on £2800 I have on a credit card and are querying this. My mortgage broker is saying I may have to sign something stating that I will pay this off in due course although I haven't got the money to do this right now. She says that if you signed it anyway the lender would not check up on this unless I defaulted on the mortgage.

They may however reduce the amount they are prepared to lend me which will be a problem. Whats likely to happen?

meanmachine_2

If you're with an affordability lender that will affect how much you can borrow.

If you go with one that uses the traditional (and more responsible) salary multiple, then it probably wouldn't.

£2800K doesn't sound like a huge amount. I'd shift it to a 0% credit card though, then at least it won't grow.

rach83

I think its based more on salary multiples to be honest judging on how much they want to lend me as its 3.25 x my annual salary. The credit card is on a 0% deal and I am making good progress at paying it off.

Suppose I will have to wait and see what the broker says tomorrow.

Rach

AndrewSmith

Hi,

When calculating the amount you can borrow a lender will look at all your existing committed outgoings such as loans, credit cards, HP etc.

These monthly payments will be multiplied by 12 to give an annual payment. This amount is then deducted from your salary before the multiple is applied.

Example-

salary £25,000

Loan payments £250 per month.

250 x 12 = £3000

25,000 - 3000 = £22,000

£22,000 x 3.5 (average income multiple) = £77,000.

With credit cards most lenders will use a monthly payment equivalent to the minimum payment payable on the outstanding balance, usually between 3-5%. This monthly payment is then subject to the same calculation as above.

This is the way most lenders operate. Be careful when being asked to declare you are paying off things when you are not. The lender reserves the right to make this a condition of the mortgage offer in which case they would not release the money to buy the property until the solicitor has confirmed that the debt has been cleared ( I have seen people fall into this trap, so it does happen!!).

Also remember that you are signing a legally binding declaration stating that all the information you are providing on the application form is true to the best of your knowledge.

Bear in mind that if you are accepted for a mortgage based on false information and actually proceed to completion, if you are found out you may be sued for obtaining money by deception (again something I have seen happen to people( not clients of mine I may add lol) but very rarely). Also the broker asking you to put incorrect information on the form is liable to prosecution for mortgage fraud (there have been many recent cases of this especially with self-certify mortgages).

Remember that mortgage companies have underwriting proceedures for a very good reason, to ensure that you don't end up with a mortgage you cannot pay. The last thing any lender wants is a property they have repossessed, and have to try and sell in a currently slow housing market. It may seem like they are putting up barriers but they are only exercising their duty of care to ensure affordability.

After all, if you take the mortgage and can't afford it in 6 months time, who will you blame?

Sorry if this all sounds a bit anal and high and mighty, but I do get annoyed when clients are advised to do this kind of thing.

At the end of the day I know that all the decent mortgage advisors on here will agree with me.

You must do only what you are comfortable with.

Rant Over, climbing off the soap box now. Apologies for my verbal outpouring lol.

Regards

Andy

payless

AndrewSmith wrote:

At the end of the day I know that all the decent mortgage advisors on here will agree with me.

agreed - tell the truth, if with that info -they won't lend enough , start looking for a lender that will ( so long as you can afford it)

ps .. I hate it when someone posts " I agree" just for the sake of it .... but in this case Andrew sort of requested such confirmation

pps ... Andrew, nice to have you on board , great to see a new face (if you know what I mean)

AndrewSmith

Hi and thanks Payless.

It's nice to be part of such a forum as this.

P.S. Have trimmed the tail a bit, how's it look now? lol

payless

thanks - looks good to me ( i've edited my last post that referred)

rach83

Heres another question for you mortgage advisors!

Having slept on this overnight I am seriously thinking about not going ahead with my purchase for the moment and maybe do it next year. I am worried about the property market and I have generally got cold feet about the whole thing. I have just come out of a difficult relationship and I am due to start a new job soon and I just don't think that now is the right time.

I have paid C&G £399 to set up the fixed rate that I was going to go for. Because I have not completed on the mortgage will I see this money again?

Thanks

payless

with C&G the fee is usually classed as spent once fix rate is reserved, however wonder if given they found some credit (BTW why did you not declare in first place) , they have actually reserved funds

rach83

To be honest with you the mortgage broker did not ask me about it so I just kept quiet about it. I don't think anything has been finalised cause obviously they are checking my credit file etc before commiting to anything. If that is the case then will I see my dosh again?

payless

C&G woulod only do a credit check on completion of either an agreement in principal ( which is first few pagesw of the full application) or full application

Fees would normally payable on submission of the full application

Either case the forms request details of current credit card commitments -
did you fill the forms out yourself , or signed what the broker completed

If C&G don't refund , maybe ask broker ?