No obligation to clear credit card balance?

freddieD

I recently received a mortgage offer, from the Halifax, through a broker that I suspect is a bit dubious. The offer states, in the conditions, that I have agreed to re-pay all or some of the credit card balances I have at the moment but they do not specify an amount. I asked the broker what would be the minimum they expect me to pay or how they will know how much I pay. The broker told me that once I have the money in my account they cannot check if I have paid all or some of the credit cards. He also said that they cannot come and ask for their money back and that I can do whatever I want with the money. Is this true? could it be that the broker wants to convince me to accept the offer, just like that so that he does not lose his generous commission?

kingstreet

Generous commission?

0.35%?

I'd debate that with you on another day...

If the broker has indicated to the lender that the debt will be repaid, it should be repaid. However, the lender may choose not to follow-up such a requirement.

As you can repay the credit on completion day and redraw it the day after, it's a bit of a joke, but not really in the spirit in which it's intended - ie to help affordability with the mortgage payments.

Thrugelmir

Standard condition of a mortgage offer. By signing and returning the offer you agree to the term. Protects the lenders interest in the equity in the property. Should something untoward come to light after completion. In effect you are indemnifying the lender.

Let_Us_See

Nothing dubious, conditions are written into an offer for specific reasons and form part of the mortgage contract. Undoubtedly, you declared all your existing financial commitments to the lender at the time of application? Possibly to achieve affordability the lender has requested you clear these credit card balances, and if they haven't specified an amount, then they normally expect a total clearance. This is a condition of the mortgage offer.

Can they, and will they check. Yes, they definitely can, and often do, usually at the same time they receive the solicitor's request to release funds. Therefore, they will expect you to clear these commitments on or before completion, but what you do the day after, is purely down to you. But at least you would have complied with the condition of offer.

ValHaller

'Some or all' is a bit too vague to police. But you are most vulnerable between Exchange and Completion. Try to get 'some' money repaid before Exchange so that you can demonstrate strict compliance, even if only by deferring purchases from current funds until after Completion

freddieD

Let_Us_See wrote: »

Nothing dubious, conditions are written into an offer for specific reasons and form part of the mortgage contract. Undoubtedly, you declared all your existing financial commitments to the lender at the time of application? Possibly to achieve affordability the lender has requested you clear these credit card balances, and if they haven't specified an amount, then they normally expect a total clearance. This is a condition of the mortgage offer.

Can they, and will they check. Yes, they definitely can, and often do, usually at the same time they receive the solicitor's request to release funds. Therefore, they will expect you to clear these commitments on or before completion, but what you do the day after, is purely down to you. But at least you would have complied with the condition of offer.

Yes, but I repeat, the said "clear some or all of the credit card debts". To me, that is anything between £1 and £20,000. So what amount would they check?

freddieD

ValHaller wrote: »

'Some or all' is a bit too vague to police. But you are most vulnerable between Exchange and Completion. Try to get 'some' money repaid before Exchange so that you can demonstrate strict compliance, even if only by deferring purchases from current funds until after Completion

The broker assures me that they will allow the money from the mortgage to be used for paying some of the credit card debts. The idea for the mortgage was to use some of it (I need less than the are offering me for home improvements) to consolidate debts.

Let_Us_See

freddieD wrote: »

Yes, but I repeat, the said "clear some or all of the credit card debts". To me, that is anything between £1 and £20,000. So what amount would they check?

I agree, it is a strange terminology and I have never previously experienced such an ambiguous condition of offer.

ValHaller

freddieD wrote: »

The broker assures me that they will allow the money from the mortgage to be used for paying some of the credit card debts. The idea for the mortgage was to use some of it (I need less than the are offering me for home improvements) to consolidate debts.

Well, lets turn the question around - how much debt do you have, how much surplus do you have and how much do you intend to pay off?

Consolidation is a fairly ugly concept in that it marks a step down a slippery slope. The fact that you are asking how much - or possibly how little rather than being very clear about how much you should pay off is a warning sign.

But if you would like some reassurance, I am sure some answers would get you some good opinions

freddieD

ValHaller wrote: »

Well, lets turn the question around - how much debt do you have, how much surplus do you have and how much do you intend to pay off?

Consolidation is a fairly ugly concept in that it marks a step down a slippery slope. The fact that you are asking how much - or possibly how little rather than being very clear about how much you should pay off is a warning sign.

But if you would like some reassurance, I am sure some answers would get you some good opinions

Consolidation works in this instance as the interest in the mortgage is less than the interest in the credit cards. Besides, I am selling the property so I will pay off all debts, including the mortgage and all credit cards.

How is it a warning sign? I am saying, if they do not specify the amount to pay on the credit cards, is it my fault if I pay £1 into them and then they come back and tell me they are not happy? How long is a piece of string?

ValHaller

freddieD wrote: »

Consolidation works in this instance as the interest in the mortgage is less than the interest in the credit cards. Besides, I am selling the property so I will pay off all debts, including the mortgage and all credit cards.

How is it a warning sign? I am saying, if they do not specify the amount to pay on the credit cards, is it my fault if I pay £1 into them and then they come back and tell me they are not happy? How long is a piece of string?

ooooh! touchy!

Most people here know what consolidation is and how it is supposed to work. Your defensiveness in your response has just made your warning sign a bit bigger. And you do seem to be asking how little you can pay off.

Consolidation can work just fine. But for debt junkies, it just frees up the original credit to have another splurge.

And I notice you have defended rather than giving any idea of how much for any of the things you asked. It's not my money but I am getting a seriously bad vibe.