Mortgage Offer - You Must Repay The Following Commitments in full with 30 days...

dannyiddo

Hi all,

I have read a number of threads on this matter, but not found the answer to this.

We applied for a mortgage through a broker. They got us accepted within 2 days of applying, through Woolwich/Barclays.

I noticed today that on the offer it says:

"You must repay the following commitment(s) in full within 30 days of completion of this morgage without taking on further borrowing. Name - Credit card - Balance £1173.00"

I spoke to my broker and they said:

"The credit card can remain active and I would recommend not using until after completion."


So what is the best plan?? We COULD pay this amount, but it would leave us quite tight this month.

Could we pay the balance off within 30 days... and then just use it again a few days later?

What is the exact rule here? Does it mean they expect us to close our one and only credit card, and then NEVER use it again??!

It feels crazy that this small credit card would matter... buy hey!

notbritishgas

My interpretation is that you must pay off the balance but you cannot borrow money to do so.
Agree with te broker that you can keep the credit card but perhaps not use it until mortgage used to buy property which does seem silly as you could then spend £1000 on it.

david1951

I would call them and ask for clarification.

Is it just your normal monthly spend, i.e., do you pay your card off in full each month?

dannyiddo

The credit card was used for a one off purchase around 6 month ago (a laptop for £1500).

We often pay around £50-100 a month. But then sometimes use the card for odd things. Random things like car parking, or a train ticket.

We put down £100 as our monthly credit commitment on the affordability sheet. The mimimum payment we are asked for is usually around £30-40.

I have heard that is VERY unlikely the lender would check we have paid off the balance. It is a barely noticeable term hidden within lots of conditions - the broker did not inform us of it when telling us we were accepted. But we do not wish to risk any future problems by not paying it off.

My main question is really, if we pay it off within 30 days of completion, can we then use the card very shortly afterwards? It doesn't really stipulate that we can't use it in future.

Just a REALLY weird condition from our point of view??!

Oakdene

Not weird at all, when I got my (sole) mortgage through Natwest they looked at my outstanding debt & gave me a mortgage offer on the basis that the balance was cleared before completion. I had to take a statement into them to show I had paid it off before they would pay out.

moneyistooshorttomention

I'm reading this as being part of the recently-introduced affordability criteria lenders now have - in order to ensure people can afford their mortgage payments.

Looks like they've decided you can't afford both the mortgage payments and credit card payments - hence telling you to pay off the credit card before getting the mortgage.

No idea whether they re-visit this later to ensure that the payment you cant afford (ie credit card payments) is being made again. Obviously they'll know that a noticeable number of people will try to get through this on a technicality (ie only paying it back temporarily and then using that credit card again) - so I would rather expect them to do some sort of check several months later in order to ensure that people arent doing so.

Oakdene

moneyistooshorttomention wrote: »

I'm reading this as being part of the recently-introduced affordability criteria lenders now have - in order to ensure people can afford their mortgage payments.

Looks like they've decided you can't afford both the mortgage payments and credit card payments - hence telling you to pay off the credit card before getting the mortgage.

No idea whether they re-visit this later to ensure that the payment you cant afford (ie credit card payments) is being made again. Obviously they'll know that a noticeable number of people will try to get through this on a technicality (ie only paying it back temporarily and then using that credit card again) - so I would rather expect them to do some sort of check several months later in order to ensure that people arent doing so.

For whats its worth, my offer only stipulated that the balance has to be zero in order for me to release the funds for the purchase. I did ask my advisor & she said I was free to use the cards after the purchase. From memory she had to update an online form to say that she had seen proof of the cleared card...

G_M

dannyiddo wrote: »

"You must repay the following commitment(s) in full within 30 days of completion of this morgage without taking on further borrowing. Name - Credit card - Balance £1173.00"

I spoke to my broker and they said:

"The credit card can remain active and I would recommend not using until after completion."

Seems perfectly clear:

1) pay off the £1173
2) refrain from using the card till you Complete

Anything else could result in your mortgage offer being declined/withdrawn.

dannyiddo

But the thing, it is well with affordability, so I don't understand it.

We had an agreement in principle for £480k but are only taking on a £250k mortgage.

We are planning to make overpayments of around £1000-2000 per month depending on the monthly situation.

But money is much tighter right now, because of paying out the large deposit, fees etc and us getting married in February. So we would rather avoid paying off another £1200 this month if we could avoid it.

dannyiddo

Thanks, I think this is what we will do then!!

comeandgo

Yes, we had the same stipulation with our mortgage offer and our financial adviser had to certify they had been paid,and that was 8 years ago. We did use our credit cards a few weeks after just as usual.