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

antrobus

Laver wrote: »

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.

So I would contact them and say oops, sorry, I forgot about this. I didn't really consider this 7k as debt because it's all at 0%, and it's all just part of my cashflow mangement, and it's all going to be cleared pdq anyway.

antrobus

GMS wrote: »

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.

To quote the OP; "the credit card debt is around £7k" and "I'm looking to borrow £256k. The value of the property is £385k"; being no doubt the "35% deposit" the client has saved. OP may well have used credit cards to help build up their savings - I believe that it is called 'stoozing' and there is advice here on MSE on how to do it - but a £129k cash deposit clearly trumps a £7k credit card debt.

One needs to be in full possession of the facts before rushing to judgement.

GMS

7k worth of debt is significantly less than the available deposit, agreed but it still means a chunk of deposit is borrowed.

If the applicant has such cash amounts available then why not repay the card debt?

However for the purpose of affordability the credit card debt would need to be taken into account, and as a result may alter a lending decision.

To condone a non disclosure of material information is shocking. Not answering a question regarding an application truthfully is fraudulent.

If I chose to eliminate such information from a client's application I would be hung, drawn and quartered.

shimano

Declare it of course, wont make a difference with your figures. I had 8k (also 0%), with 26% deposit and a salary similiar to yours. They weren't bothered about it.

ashg77

Ok - I phone co-op and told them that I might have forgotten to declare the credit card balance.

They told me that it would have been picked up as part of the affordibility and credit checks which have all passed so I shouldn't worry about it. The advisor has now passed this on to the Underwriters recommending that they approve the mortgage and issue the offer.

Also - I bank with the co-op and one of the credit card balances is with them!

FYI - I did save the money for the deposit - however any large purchases that I've done over the last 2 years have all been done on 0% credit cards so that I could put away as much cash as possible. Now that I have my cash lump some for the deposit, I'm focussing on paying off the cards. Ideally, I would have paid off the cards before buying the house but this house came up out of the blue and I've had to move quickly.



I feel a little better now I've spoken to the co-op. Hopefully it all goes through ok. I'd be gutted if I miss out on the house because of a foolish oversight on my part.

GMS

Good result.

From an underwriter point of view they would look at the balance outstanding and possibly offset this against your deposit, which you have saved. They could view your deposit as 7k less than it actually is due to a liability of 7k.

In your situation 7k is a small percentage of the deposit. If it was a 10% deposit on a 100k house, with a 7k credit card balance it could be a totally different situation.

The main thing is you have declared it, no problem with the mortgage, and no issues likely to arise from a non disclosure.

Good luck with the move

antrobus

GMS wrote: »

7k worth of debt is significantly less than the available deposit, agreed but it still means a chunk of deposit is borrowed.

If the applicant has such cash amounts available then why not repay the card debt?

However for the purpose of affordability the credit card debt would need to be taken into account, and as a result may alter a lending decision.

To condone a non disclosure of material information is shocking. Not answering a question regarding an application truthfully is fraudulent.

If I chose to eliminate such information from a client's application I would be hung, drawn and quartered.

As a working rule; theft plus deception equals fraud. Deception on its own is insufficient to establish fraud. Where you, as a mortgage advisor, to knowingly (or even negligently) omit material information from a client's loan application, then you would very likely have commited fraud. Because, no doubt, it could be argued that you had done so in order to obtain a brokerage fee that you otherise would not have received. From an individual's point of view, it is sometimes less clear cut. Take for example the well known example of Peter, now Lord Mandelson, who famously neglected to tell his lender that the whole of his cash deposit was in fact a loan from a certain businessman of his acquiantance. And yet despite the publicity given to the case, he was never charged with any criminal offence.

It would also be important to note that loan applications are not insurance contracts, uberrimae fides does not apply. Individuals are only required to provide the information asked for. (Which is why I was at pains to find out from OP as to whether the lender had asked the appropriate question.)

It's simply the case that OP has been taking advantage of CC 0% deals to help build up a cash balance. The size of the remaining CC debt is trivial (5%) compared to cash resources OP has available. In the circumstances I might well have advised OP to have paid off the damn things before talking to the Co-Op, but we are where we are. OP would (as stated above) be best advised to fess up to the Co-Op, hence nothing is condoned.

P.S. I think GMS can sleep safely in their bed. Hanging, drawing and quartering was abolished years ago.

antrobus

ashg77 wrote: »

Ok - I phone co-op and told them that I might have forgotten to declare the credit card balance.

They told me that it would have been picked up as part of the affordibility and credit checks which have all passed so I shouldn't worry about it. The advisor has now passed this on to the Underwriters recommending that they approve the mortgage and issue the offer.

Good. Like I said before, it's not a deal breaker. They've already checked what cards you've got. It's more for you peace of mind than anything else.