Advice needed: Do lenders check your finances routinely?

JR26

Myself and my partner recently took up a mortgage to buy our first home. After checking all of our finances the bank agreed to lend us the amount we wanted on the condition that I cancelled a monthly direct debit. This is a monthly payment of £400 per month to my parents for a car they financed for me. I have another year until it is paid off.
We can comfortably afford to pay this as well as all the other outgoings, mortgage, bills etc and although I agreed to cancel the direct debit I do still need to pay the money back one way or another. I have left the money in my account since April and skipped the direct debit each month.
What I'd like to know is, is the lender likely to come back somewhere down the line and ask me to prove that I 'kept my end of the bargain' so to speak and ask to look at my bank statements? Are they going to check that this payment has not gone out since they approved the mortgage?

Any advice would be much appreciated. Thank you.

swindiff

Pay them in cash or do a bank transfer each month. Seems to me if you have cancelled the direct debit you have held up your end of the bargain. The lender cant dictate how you can spend your disposable income each month.

LateStarter

Is the direct debit/current account with the same bank as the mortgage? If so they can easily see any changes in outgoings in the future. That being said, it's extrememely unlikely they'll ever do a follow up check on your finances once the funds are released and you're making your payments on time. What would be the point? Banks don't employ compliance police to snoop on paying customers.

JR26

LateStarter wrote: »

Is the direct debit/current account with the same bank as the mortgage? If so they can easily see any changes in outgoings in the future. That being said, it's extrememely unlikely they'll ever do a follow up check on your finances once the funds are released and you're making your payments on time. What would be the point? Banks don't employ compliance police to snoop on paying customers.

No, I bank with a different bank to the lender. This is my first mortgage so I have no idea what they do, just wanted to know if anyone else had been in a similar situation, thank you for the advice.

Goldiegirl

They haven't got the staff to randomly check accounts, and once you have completed the mortgage and you're making the payments, they have no reason to look at your account.

However, I'm a little confused by the mortgage condition 'stopping a direct debit'.

Never come across this before.

Firstly, you wouldn't have a direct debit to pay your parents, it'd be a standing order.

Normally a mortgage condition relating to outgoings would involve paying off a debt.

Are you sure this mortgage condition didn't ask you to pay off the car debt?

Even so, they still wouldn't be checking up on you at this point. BUT, if you applied for a further advance or other service and they had to review your finances, and noticed you hadn't paid off a debt that you should have paid off when you completed the mortgage - they'd probably be less likely to help you in future.

JR26

Hi Goldiegirl, thank you for your reply.
Yes, you're right, it was a standing order, apologies for the confusion.
the lender asked for a signed letter from my parents to say they no longer wanted the monthly payment from me which I guess would mean that the debt would then be theirs and not mine. So, effectively, my debt has been paid off.
That is a good point that they may see this in the future if we wanted to remortgage with them.

Thrugelmir

Relationships are built on trust. Likelihood of this being checked is remote. However should your financial situation deteriorate for any reason. Then you would be in breach of contract. With little defence to any action that the NW may wish to take.

amnblog

Fortunately, the lenders do not have the mechanism to monitor your finances once a loan has been issued.

Prothet_of_Doom

I don't know why a lender would ask you to do something that it can't police. There is nothing to stop you smashing up your car next week and asking mummy, or wonga for a loan to fix it or buy a new one.

Have you signed up to say you won't ever borrow a penny off mum and dad again ? No ? Then this is a new arrangement.

Thrugelmir

Prothet_of_Doom wrote: »

I don't know why a lender would ask you to do something that it can't police.

Legal technicality. By accepting the offer the borrower agrees to the conditions set.