Balance transferring to someone else then taking balance back once moved

Anamox

Hi,
My housing situation has changed suddenly and I'm requiring to move somewhere more expensive, permanently.
I'm struggling to get a mortgage offer where I can take a mortgage and retain £10k of credit card debt, as they're worried about indebtedness moving forwards. Even with these credit cards my personal earnings leave me with £1100 odd after all expenses, with the new mortgage likely to be on a lower interest rate I could be even better off after moving. The new housing situation is costing me £600 a month in travel expenses so times are getting more desperate. My annual bonus in September will be circa £10,000 and will pay off the credit cards in full. I have mortgage offers secured on the basis I clear these debts on completion, and that I clear them without the use of other credit facilities.

Is there anything stopping me transferring my balances to someone elses card, then taking it back onto my cards (I already have £30k odd of 0% balance transfer available) a few days after I move out? 

Second question is, do they even check you've cleared your debts when you move out? Previously I had to clear a bank loan and car finance on completion, although I did pay these the day after I moved out they never contacted me ever again or did a visible credit check. I wouldn't dream of risking it in this sense, but is it just the "threat" that ensures people pay off these debts?

Thanks all, stay safe!

annetheman

I'm no expert but they do this for your benefit, so you're not put in a financially compromising situation that means you can't pay your mortgage for whatever reason. Again, I'm not an expert but it seems fraudulent to me and should they complete a credit check before completion (and completion could be delayed for a number of reasons), and your level of credit utilisation has changed suddenly (even a decrease) and they need to investigate, I reckon you'd really have trouble borrowing then.

Perhaps check out lenders who don't mind high credit card debts with guaranteed additional income e.g. bonus, confirmed by employer, that is incoming and can clear them. A broker should be able to advise - good luck

davidmcn

It's as fraudulent as simply leaving the balance where it is and not declaring it. 

Anamox

annetheman said:

I'm no expert but they do this for your benefit, so you're not put in a financially compromising situation that means you can't pay your mortgage for whatever reason. Again, I'm not an expert but it seems fraudulent to me and should they complete a credit check before completion (and completion could be delayed for a number of reasons), and your level of credit utilisation has changed suddenly (even a decrease) and they need to investigate, I reckon you'd really have trouble borrowing then.

Perhaps check out lenders who don't mind high credit card debts with guaranteed additional income e.g. bonus, confirmed by employer, that is incoming and can clear them. A broker should be able to advise - good luck

If they credit checked before completion, something I’ve never experienced, all they’d see is the debts are cleared - something I’ve already promised them, but a change in equity with the house has forced me to look at other options. If they asked it would be surely as simple as saying “my x/y/x relatives took the debt onto their own card in lieu of a gifted deposit, and they’ll retain that debt”.

The debt would return to my name potentially a few months after completion, when it’s as simple as conducting a favour for that x/y/z relative because they decide they can’t afford the interest rate etc.

On the credit front I’d see this as no different to clear my debts with equity, then using the same credit cards after moving in to pay for furniture or taking out HP for furniture as many do. 

The post is more about if the mechanics are there allowing you to do this, and do mortgage lenders specifically say you cannot do it? 

Thrugelmir

How do you propose to transfer the balances across? 

Anamox

By somebody requesting a balance transfer from my card to theirs... 

Thrugelmir

Anamox said:

By somebody requesting a balance transfer from my card to theirs... 

Both cards will need to be in your name. With £30k of debt you may struggle to find BT's  that cater for an amount of that size. 

davidmcn

Anamox said:

do mortgage lenders specifically say you cannot do it? 

They ask you to declare all your debts as part of the application. Turning it into a debt due to a relative doesn't mean you're allowed to not disclose it.

Anamox

Thrugelmir said:

Anamox said:

By somebody requesting a balance transfer from my card to theirs... 

Both cards will need to be in your name. With £30k of debt you may struggle to find BT's  that cater for an amount of that size. 

This is not quite correct, only two banks that I know of require the name to be the same. A few more require the address to be the same and the rest don't have any requirement on this front. I've balance transferred like this before for other reasons. There is not £30k of debt, there is £10k of debt. £30k is the credit limit of which I would use to move the £10k back eventually if I figure out if it's allowed.

davidmcn said:

Anamox said:

do mortgage lenders specifically say you cannot do it? 

They ask you to declare all your debts as part of the application. Turning it into a debt due to a relative doesn't mean you're allowed to not disclose it.

They know my debts, as mentioned the mortgage offer only states that I must pay off the debts on completion or just after and the only visible rule is I cannot use a credit facility in my own name to clear the debt. The debt wouldn't go to a relative, it would go to the card of a friend. Even if I paid the debts off with my own cash, the original plan, I would have used the credit cards shortly after moving to get it back up to £10,000 as it's hugely beneficial to keep that balance there for air mile balance transfers. I don't believe there are any rules on getting into debt once you're living in a house, I don't think they can tell you what you can and can't do with credit once you have been given the mortgage; that's up to the other credit providers to assess. By this logic and this logic alone I'm assuming the process I'm suggesting would fall under that category...