Advice needed! Do i come clean about my credit card debt?

ashg77

Hi Guys,

First time poster here.

I'm in the process of trying to buy a house and have applied for a mortgage with the Co-op. I've been saving away for years and have managed to save 35% deposit. The amount I'm asking to borrow is about 3.9 times my salary.

This would be my second mortgage as I already have a mortgage with Bank of Ireland for my current property. I have just obtained consent to let on that property, which was very stressful and a time consuming process, and the Co-op now seem happy enough with that.

Now on to the problem. Basically in order to help me save over the last couple of years, I have built up a significant but manageable balance on my credit card cards. These are at 0% or at low rates. Now I've saved the deposit, paying off these credit cards is my number one priority.

But the problem is I actually havent declared these to the mortgage provider as basically i kind of forgot about them as I was so concerned with getting consent to let on my existing morgate.

The co-op mortgage application has passed all the affordibility checks and credit checks is now with the Underwriters to sign off, which i believe is standard practice with the co-op.

The question is... do I come clean and tell the co-op about the credit card debt now or do just leave it and see if they find it?

Your thoughts/advice is appreciated!

Thanks,

Ash

firstaspect

They will find them when they do the credit checks anyway so it's better to be upfront and honest. However in the current market mortgage lenders are getting quite strict on existing debt so you may find that they reject you based on them.

herbiesjp

ashg77 wrote: »

Hi Guys,



But the problem is I actually havent declared these to the mortgage provider as basically i kind of forgot about them as I was so concerned with getting consent to let on my existing morgate.

The co-op mortgage application has passed all the affordibility checks and credit checks is now with the Underwriters to sign off, which i believe is standard practice with the co-op.

Ash

Kind of forgot.

Well now that you have remembered, you might want to disclose them.

They will find them via credit checks - the fact they are 0% means nothing to the lender, as they are assessed on a repayment of around 3% or 5%.

How much are these debts?

What is your income?

What mortgage amount are you looking for?

GMS

'Forgetting' to disclose debts is mortgage fraud. You should NOT do this under any circumstances as it may have a hugely negative effect on future credit applications.

Your balances will be treated as a commitment, with a general calculation of 3% of balance as a monthly amount.

You have not actually saved a deposit, you have borrowed it. Regardless of the rate you are paying it is a loan. The lender will not view a 0% rate any differently than a 30% rate.

It is possible that the credit cards may not show on the credit searches as there are 2 main credit reference agencies (Equifax and Experian) and information can differ between the 2.

If bank statements have been provided/requested this may well reveal the debts.

How can you be certain you can afford the mortgage with the significant credit card debts in place? What happens if you have no tenant in the rented property? Can you afford 2 mortgages?

Sounds to me like you are spreading yourself very thinly and could end up in a sticky situation.

ashg77

My income is £66k and the credit card debt is around £7k. I've been working with the same employer for 6 years and have a very good credit rating.

I'm looking to borrow £256k. The value of the property is £385k so that means my LTV is around 66%.

I know "forgetting" sounds a little lame. But it is the truth. When I was doing the mortgage application over the phone, all the questions centered around the exising property and I kind of forgot the mention the other debts.

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antrobus

ashg77 wrote: »

The co-op mortgage application has passed all the affordibility checks and credit checks

Then I would presume they already know about your credit cards.

You're basically pumping in £129k into the deal, so I can't see that anyone is going to worried about an extra £7k of debt floating about. Since your application was done over the phone, I'd assume that the Co-Op didn't ask you point blank 'have you any credit card balances outstanding', otherwise you'd have said 'yes'. They must have also sent you some kind of formal application document to sign - is there any section of that document that refers to credit card debt where it is now clear with the benefit of hindsight you should have put some numbers down?

If you're really worried about it, phone em up and ask em. Can't see that it would be a deal breaker. The Co-op would probably be happy to lend you the extra £7k to pay off the balances if you wanted.

P.S. The quality of some of the 'advice' given above is quite appaling. Talk about jumping to conclusions.

GMS

Which particular 'advice' is appaling?

Laver

I've recently (just last week) signed the mortgage application sent to me by Co-Op after passing the initial credit check and affordability check, and there's definitely a section regarding credit card debt which we included in our telephone application.

antrobus

GMS wrote: »

Which particular 'advice' is appaling?

For one thing, the statement "You have not actually saved a deposit, you have borrowed it." That's what I call jumping to a conclusion.

GMS

Now on to the problem. Basically in order to help me save over the last couple of years, I have built up a significant but manageable balance on my credit card cards. These are at 0% or at low rates.

Quote above from OP.

Clearly borrowing on a card in order to save. Borrowing is not saving.