Mortgage Offer Condition to repay debts

pdej4

We've just been issued our mortgage offer, and whilst checking it I've noticed that the Skipton BS have put in a condition to ensure that specific debts have to be cleared (totalling about £30K) and they have to be cleared before completion.

My wife is currently voluntarily in hospital, and she is recieving sick pay, but is also in the process of starting a new job which will commence in September. Based on our salaries and with our debts combined the mortgage was affordable. However the bank had an issue with the fact that my wife was in hospital and wanted to see evidence of her being back at work before making an offer. We couldn't do this, and the broker suggested the next best course of action would be to remove my wife from the financial equation so to speak. He said as a paper exercise, he would tell them that my debts would be written off by my father and that I would take on my wifes debts, but they would use my salary only, therefore no longer requiring the evidence of my wifes salary that they would be happy with.

It all went through ok, until I saw the condition added that they have to be satisfied ON or BEFORE completion.

Now potentially my father could actually pay off said debts, and we would pay him back on the same terms we were going to with the various lenders, but broaching that and convincing him to do that is another matter.

I'm guessing the solicitors will need evidence to prove that the debts have been repaid before allowing the bank to go to completion and issue the funds? If that is the case, then I think we could be screwed and will have wasted a lot of money at the say so of our broker. Or is it just a case of us signing a form for the solicitor to say that we have repaid the debts?

Like I say we've gone through the monthly finances and can afford to repay the mortgage easily. We're meant to be completing in a matter of two or three weeks, and to complicate matters our broker and his admin assistant are both on holiday at the moment until the end of next week.

EDIT - Thanks in advance for any insights or advice.

harvey115

If the offer has retention on the mortgage amount until the debt are paid back, then I do not think you have any other option other then paying the debt off. I would assume the solicitors will need to see evidence in order allow the money to flow.

I think you should speak to your father ASAP an explain the situation, if he has the money and do not need it immediately. I am sure he would understand.

Best of luck.

pdej4

Thanks, it's not what I wanted to hear, but it is what I thought.

My father has been great so far - he's contributing £25k to the house as it is, and I'm really not sure how he will feel about lending us the rest. Going to have to have that call after work...

Thrugelmir

Your mortgage advisor appears to be more interested in their commission than giving you sound advice.

kingstreet

I'm guessing the solicitors will need evidence to prove that the debts have been repaid

You're worrying about nothing and don't guess.

You complete and pay off what you owe then. The on, or before, thing is phrased like that to tell you not to delay.

You will not be asked to produce evidence these things have been paid off if it isn't set out in the offer.

pdej4

kingstreet wrote: »

You're worrying about nothing and don't guess.

You complete and pay off what you owe then. The on, or before, thing is phrased like that to tell you not to delay.

You will not be asked to produce evidence these things have been paid off if it isn't set out in the offer.

Completely correct as it happens. I spoke to our solicitor who has been fantastic through the whole process and they called the bank to confirm what evidence if any would be required. It turns out nothing at all, and that they don't even need to be paid back before completion. Its up to us to do it at some point in the future.... what's the point in the condition then? I guess, it's a case of if it all falls through in the future and we start missing payments that they could blame us if we haven't paid the debts off?

As a part of this process I might have gotten our broker into trouble with his director who was the only person left to speak to in his office. With only a matter of two or three weeks left before we hopefully complete, I felt we had to explain everything, and he wasn't happy about "making things right on paper". I got a call from our broker who wasn't happy as he was on holiday, but then I thought, I'm paying you £350 and I expected your advice to be sound and to recieve some level of service from your office even if your not there. I haven't been terribly impressed with the service, which is a shame as there was someone else who was also local, and cheaper (£250), but I felt we had better rapport with this guy, and that he was more trustworthy. He wasn't happy that I'd called his office and said what I had, but at the end of the day, he still gets his money even if our mortgage falls through because of his advice and then on top of that we loose all the fees we've paid which could at this point amount to nearly £4000. Am I being a bit unfair?

I do have high levels of expectation of service industries, because I act to a high level in my own job. I felt that the broker knew about these conditions before he went on holiday as he had them emailed to him and if he'd have bothered to earn his money he would have checked everything and made a quick call knowing this condition would have made us nervous to put our minds at rest. At least if I were in his position I would.

I saw somewhere else on the forum yesterday that someone asked, are brokers too busy earning money from all of their customers that they cannot return calls. I'm beggining to think that!

Interestingly the broker we chose from a selection of people I could find on the internet as no one we know could recommend anyone (we're not from the area), but the solicitors were recommended by some friends whose family have been living in Notts their whole lives. The solicitors are excellent, and maybe not the cheapest which they themselves told me, but deliver and have provided sound advice.

Thanks to those above who replied - I realise I've gone off on about 10 different tangents in this post, but we're so relieved!

Incidentally I did speak to my father who in between the 10 minutes of me speaking to the solicitor, them speaking to the bank calling me back withdrew all the money from the stock markets...so one way or another it's all fine. Just left wondering what the next hurdle will be now!

bigadaj

Broker sounds to be bending the rules close to breaking, just wonder if you are overextending, particularly as you now seem to have cleaned your father out.

pdej4

bigadaj wrote: »

Broker sounds to be bending the rules close to breaking, just wonder if you are overextending, particularly as you now seem to have cleaned your father out.

Thanks for that, but I'm not sure you read the original post thoroughly enough. THe bank were never querying the affordability, just my wife's current situation. The route we took advice on was to avoid having to provide answers to prove she was out of hospital. If this situation was 2 months earlier, or 2 months later we wouldn't have had any questions asked at all. We both earn enough, and in fact this is being done whilst my other half is choosing to work part time, with the plan to work closer to full time hours in the not so distant future. All of our affordability has been calculated on the part time work she is doing now, we've not accounted for the fact that I will get a pay increase this year, or that I get bonuses every year, or that she is guaranteed another two pay rises (one that is quite significant) in the next two years, not to mention that my student loan will be paid off part way through next year (which means we can 'afford' to think about a family). If we were overextending we would have gone for a bigger house, but haven't.

My father would help us, but we would owe him everything that we owed the banks, including some interest to make up for what he would have lost out on. Yes, it is a priveledged position to be in, but he wouldn't have considered it if he thought we were taking on too much debt. Some people see these things as 'clearing people out', but the people helping, normally family are happy to, but I didn't actually have to ask, as I didn't really feel it was appropriate to - my father offered to, on the strict understanding that he would set the terms up to meet his and our requirements. He knows exactly what our finances are as we have checked everything through with him to get a second opinion on the affordability as like many other young couples we get emotionally involved when we see a great deal on a property in a great area.

lou72

Glad things have been sorted for you, hopefully will be plain sailing now and you can enjoy your house move

pdej4

lou72 wrote: »

Glad things have been sorted for you, hopefully will be plain sailing now and you can enjoy your house move

Thank you lou72. That's exactly what we are hoping now. We went round the house again for a third visit to check ome specific things out, like where we need to put fencing up to keep our dog from straying into other gardens, taking a few measurements etc and our vendor was really lovely to us. We all had a natter for about an hour and got lots of questions answered, exchanged numbers, and discussed when was convenient for each other to move.

kingstreet

pdej4 wrote: »

Completely correct as it happens

I would hope so after 28 years doing the job.

What is important here is that your broker should have told you this condition was likely and he could have gone on holiday knowing there was nothing he had done to make a call to him likely.

In this job you deal with everything you can foresee. If you end up having to deal with something unforeseen, that's life.