Change of credit circumstances between exchange and completion

Newbuild_3 · 4 June 2013 at 3:16PM

Hi all,

I was wondering whether anyone would be able to offer any insight as to where I stand on the following:

Mortgage offer accepted in February on a new build property due to complete at the end of June. Mortgage offer is valid until October.

At the time of applying for the mortgage, my partner and I between us owed circa £9000 on credit cards, as well as the remaining balance of a £5000 personal loan.

Since the mortgage offer, we have cleared our credit card balances to £0 and closed 2 of the 3 credit card accounts. We have also cleared the remaining balance of the personal loan. The thing is, that we have taken out a new personal loan for £14500 over a period of 4.5 years, which we have been paying without issue since March.

My question is, do you think that there will be any issues with our mortgage company when it comes to completion in a few weeks time? Quite anxious, as we have bought a lot of furniture and invested heavily already such as mortgage product fee (paid upfront), solicitors fees and deposit etc.

On a positive note, between us we have seen our annual basic salary increase by £1000 pa since the mortgage offer, as well as an uplift in variable pay (though this was not taken much into consideration at point of mortgage application). Our monthly credit commitments have reduced from circa £450 (minimum payments on cards and loan), to circa £370 (loan repayment).

Any advice would be very much appreciated!

R_P_W · 4 June 2013 at 4:48PM

Have you actually exchanged contracts? I.e committed to purchase?

Personally I think this is a very very risky thing for you to do! You say you have cleared the cards and previous loan? But then have taken out a new loan - what is the new loan for? Is it a coincidence that the amount roughly adds up to you previous debts?

ValHaller · 4 June 2013 at 5:18PM

R_P_W wrote: »

Is it a coincidence that the amount roughly adds up to you previous debts?

Roughly adds up to a little bit more which looks (and is) a whole load worse than roughly adding up to a bit less.

OP, reducing your monthly commitment with a consolidation loan - but actually borrowing more rings alarm bells. It says you do not know how to handle yourselves with credit - and marks you out as candidates to end up overextending yourselves by trying to max out the credit you can being only concerned about the monthly repayments.

Harsh, I know, I am not an underwriter - if I was, I would pull your mortgage in an instant.

Newbuild_3 · 4 June 2013 at 5:50PM

We have exchanged contracts. This was done when the original mortgage offer was made. It is a coincidence that the amount of loan adds up to previous debts. The loan did in part pay off the original loan, and the remainder was used for various purposes including buying a car to commute to work (due to the impending move), buying a few upgrades to our property (including granite worktops), and buying a few bits of furniture. We have paid our cards by paying as much as we could each month, and made the final payment this month to clear the balances. As I say, we have closed all bar 1 of our credit card accounts now.

R_P_W · 4 June 2013 at 6:24PM

So you now have a 14.5k loan. How much is on your remaining card?

Have you taken this loan after your mortgage offer was made?

R_P_W · 4 June 2013 at 6:28PM

If the lender has an issue, then money on furniture and fees is going to be the least of your problems, as u have exchanged contracts - if your mortgage is pulled how are you going to buy the property?

Building_Surveyor · 4 June 2013 at 7:40PM

Granite work tops?? Sorry but if you couldn't afford them why on earth did you take out a loan to fund this and other things? Doesn't sound like a necessity to me! Harsh but true. You've bought a brand new house and by the sounds of it want shiny new things to go in their too but couldn't really afford them. I'm no underwriter but sorry if I as someone else stated this would ring alarm bells too. Forget about keeping up with the jones, did u really need the furniture?

Did you put on your app that you would repay the debt? That's probably what's most crucial about whether it will be a major problem.

You have merely replaced debt with more debt. Sounds like a bad cycle to me.

Fingers crossed it ends positively for you.

Simon_gloster · 4 June 2013 at 7:50PM

Just hope a pre completion credit check isn't carried out!!! The application technically has significant material changes and therefore needs amending.

zarf2007 · 4 June 2013 at 8:21PM

Newbuild wrote: »

We have exchanged contracts. This was done when the original mortgage offer was made. It is a coincidence that the amount of loan adds up to previous debts. The loan did in part pay off the original loan, and the remainder was used for various purposes including buying a car to commute to work (due to the impending move), buying a few upgrades to our property (including granite worktops), and buying a few bits of furniture. We have paid our cards by paying as much as we could each month, and made the final payment this month to clear the balances. As I say, we have closed all bar 1 of our credit card accounts now.

Who is the loan with? Is the mortgage with the same lender? What is your joint income? Affordability will also be a factor.