Finance Showing (not arrears) - would this adversely affect mortgage application?

john.burn

Posted this to the loans forum, but might be more appropriate here, apologies for the dual / amended post -

Quick Question if I may, hope this is in the right forum.

A friend of mine took some finance out for a computer system they bought over a year ago - they were accepted for the finance and all went through - the rate was okay and everything is fine but... The finance company have never at any stage taken even one payment from the account and have never at any stage written to them advising them that the payment has failed (it would not have, they are not in debt and have good finances). It looks like they have screwed up and lost them in the system somewhere. Presumably if the finance company realise this they just start the payments as normal as they have had their details now since the start of the agreement.

They have now applied for a mortgage as they are thinking of moving house and the fact they have this finance agreement in place with payments of £130 per month or so has shown up - will this affect them and what are their rights? The money has been available it is the finance company that have screwed up and never taken a payment. It's not lodged as a default and they have never had a letter from them for anything.

Thoughts?

Regards,

John.

sarkin

IF there are no missed payments showing on the credit file, the only small problem I can see is that it will be taken into account with affordability. If they are not income stretching they should have no problem.

Mortgagehero

It's always best to tell the mortgage lender the details of what has happened now as the lender will be more gratefull that they know than if it came to light during the application. The lender will take the monthly loan payments into consideration for the affordabillity by usually timesing the monthly payment by 12 and deducting it from the gross income. As long as this still fits in with their lending policy then it should'nt matter.
Also an approach to the loan company will have the same positive effect as if it's left them it could go against the credit rating in the future.

john.burn

Slight update to the above info. Looks like the computer equipment wasn't for them it was for someone else and they took the lone out (I presume fraudulently) stating it was for themselves. Now I guess the problem is that they never started the payments because they were never asked for them from the finance company and thus never asked the friend who got the computer equipment for the money because again, they'd not made any payments.

Not sure how the relationship is with the friend who had the pc equipment but I said I thought it a bit much suddenly asking them for the money now as they still haven't started paying for it themselves. I know the friendship between these two is now slightly strained because of this. I know both parties here and to me, the people who had the equipment agreed to pay but were never asked for anything until the payments started to the finance company. God knows where anyone stands here legally. I'm wondering if the finance company could have recorded this as having defaulted when they have never contacted them? Is that possible. Seems like I'm missing some of the pieces here but trying to keep every talking.

John.