Change in Circumstances Prior to Exchange

Conan1Sett

Hello,

I am approaching the exchange stage and there has been a significant change in my circumstances. 

I took a consolidation loan (with a better APR) and used it to replace an existing loan that was used to make up my mortgage deposit and also to consolidate several credit card balances. These CC balances accrued because of an unforeseen circumstance that happened on the back of a fragile domestic situation. 

Basically, my parents instigated police action and then effectively made me homeless while I was waiting to a) exchange or b) return to work. Return to work specifically because I work away from home and I get room and board for four months at a time with my employer.

The loan was £7500 and consolidated amounts of £2700, £1600, £400 and £1000. I don't know where this leaves me but I am all too aware of the possibility that they will pull the offer prior to exchange and I will lose my product fees and my conveyancing fees and whatever other costs I shall incur by not completing. 

AdrianC

The sooner you talk to the lender, the better.

If this is debt consolidation, though, surely the original offer came while you had those debts? But £7,500 is a big chunk more than £2,700 + £1,600 + £400 + £1,000 = £5,700

I'm surprised they'd have accepted borrowed equity plus card debts, though. Sub-prime lender?

MaryNB

AdrianC said:

The sooner you talk to the lender, the better.

If this is debt consolidation, though, surely the original offer came while you had those debts? But £7,500 is a big chunk more than £2,700 + £1,600 + £400 + £1,000 = £5,700

I'm surprised they'd have accepted borrowed equity plus card debts, though. Sub-prime lender?

I think the remaining £1,800 is 

Conan1Sett said:

....to replace an existing loan that was used to make up my mortgage deposit....

You may be ok if the lender doesn't do another credit check before exchange but this is a big IF and no way of knowing if they will or not. Talking to the lender know is the only way to find out if this loan will be an issue. Did you need to replace the existing loan and consolidate your credit card debt before exchange? I realise it's too late now but in future you should never take out credit before exchange. 

Conan1Sett

MaryNB said:

AdrianC said:

The sooner you talk to the lender, the better.

If this is debt consolidation, though, surely the original offer came while you had those debts? But £7,500 is a big chunk more than £2,700 + £1,600 + £400 + £1,000 = £5,700

I'm surprised they'd have accepted borrowed equity plus card debts, though. Sub-prime lender?

I think the remaining £1,800 is 

Conan1Sett said:

....to replace an existing loan that was used to make up my mortgage deposit....

You may be ok if the lender doesn't do another credit check before exchange but this is a big IF and no way of knowing if they will or not. Talking to the lender know is the only way to find out if this loan will be an issue. Did you need to replace the existing loan and consolidate your credit card debt before exchange? I realise it's too late now but in future you should never take out credit before exchange. 

These CC debts were not there during the application stage. However, several months passed and I was in a position where I was bleeding cash because I had no fixed abode. 

My financial situation is somewhat better than when I began the application but I'm just wondering if I will end up in the bin what with the new loan. 

The extra £1800 is surplus. 

MaryNB

Conan1Sett said:

MaryNB said:

AdrianC said:

The sooner you talk to the lender, the better.

If this is debt consolidation, though, surely the original offer came while you had those debts? But £7,500 is a big chunk more than £2,700 + £1,600 + £400 + £1,000 = £5,700

I'm surprised they'd have accepted borrowed equity plus card debts, though. Sub-prime lender?

I think the remaining £1,800 is 

Conan1Sett said:

....to replace an existing loan that was used to make up my mortgage deposit....

You may be ok if the lender doesn't do another credit check before exchange but this is a big IF and no way of knowing if they will or not. Talking to the lender know is the only way to find out if this loan will be an issue. Did you need to replace the existing loan and consolidate your credit card debt before exchange? I realise it's too late now but in future you should never take out credit before exchange. 

These CC debts were not there during the application stage. However, several months passed and I was in a position where I was bleeding cash because I had no fixed abode. 

My financial situation is somewhat better than when I began the application but I'm just wondering if I will end up in the bin what with the new loan. 

The extra £1800 is surplus. 

The increased CC debt wouldn't have helped to begin with but the new loan will make things even worse because it is a new credit application. £5,700 is a lot of debt to accrue between an offer and exchange. I realise you went through a difficult period but unfortunately a lender may be concerned that this increased debt could impact on your ability to repay the mortgage. Even without affordability concerns, lenders don't like two large credit applications in such a short space of time. The fact you had to use part of a loan to boost your deposit is bad sign and as AdrianC said I'm surprised your lender let this slide. I presume they didn't notice. 

You might get lucky and the lender won't do another credit check but you have no way of knowing if they will or not. Under no circumstances should you exchange before funds have been confirmed (I would presume though your solicitor would not allow this to happen). 

Conan1Sett

MaryNB said:

Conan1Sett said:

MaryNB said:

AdrianC said:

The sooner you talk to the lender, the better.

If this is debt consolidation, though, surely the original offer came while you had those debts? But £7,500 is a big chunk more than £2,700 + £1,600 + £400 + £1,000 = £5,700

I'm surprised they'd have accepted borrowed equity plus card debts, though. Sub-prime lender?

I think the remaining £1,800 is 

Conan1Sett said:

....to replace an existing loan that was used to make up my mortgage deposit....

You may be ok if the lender doesn't do another credit check before exchange but this is a big IF and no way of knowing if they will or not. Talking to the lender know is the only way to find out if this loan will be an issue. Did you need to replace the existing loan and consolidate your credit card debt before exchange? I realise it's too late now but in future you should never take out credit before exchange. 

These CC debts were not there during the application stage. However, several months passed and I was in a position where I was bleeding cash because I had no fixed abode. 

My financial situation is somewhat better than when I began the application but I'm just wondering if I will end up in the bin what with the new loan. 

The extra £1800 is surplus. 

The increased CC debt wouldn't have helped to begin with but the new loan will make things even worse because it is a new credit application. £5,700 is a lot of debt to accrue between an offer and exchange. I realise you went through a difficult period but unfortunately a lender may be concerned that this increased debt could impact on your ability to repay the mortgage. Even without affordability concerns, lenders don't like two large credit applications in such a short space of time. The fact you had to use part of a loan to boost your deposit is bad sign and as AdrianC said I'm surprised your lender let this slide. I presume they didn't notice. 

You might get lucky and the lender won't do another credit check but you have no way of knowing if they will or not. Under no circumstances should you exchange before funds have been confirmed (I would presume though your solicitor would not allow this to happen). 

My solicitor was the one that flagged it.

My credit rating is still in the 900s but I'm not sure how far behind the rating system is. I must needs inform the lender of my financial situation. I don't know if they will do another credit check on the back of it but I am going to show them all of the credit balances anyway. 

If this does fall through, how long before I can apply for a mortgage again? 

MaryNB

Credit score is irrelevant. A lender won't see it, they will only see the information contained on your credit report. They will do their own internal assessment and scoring based on that information.

A recent example - my friend remortgaged and reduced his monthly payments. A few weeks later he applied for a £12,000 loan. His credit score was 999. The loan repayments plus his reduced mortgage repayments were less than his original mortgage repayments. His bank turned him down because it wouldn't approve two large credit application in a short space of time. Didn't matter that his experian score was 999 or that he could afford it. 

I'm not sure there's a fixed time period but generally a minimum of 6 months between credit applications is recommended. You'll also need to focus on reducing your debt. Your monthly loan repayments will be taken into account for the affordability checks. 
You should talk to a broker if you need to reapply in the future. They'll help you avoid another failed application. 

Octothorpe

Could you not exchange and complete on the same day, or am i missing something?

MaryNB

Octothorpe said:

Could you not exchange and complete on the same day, or am i missing something?

When the solicitor asks for release of funds the lender may do another credit check and may retract their offer because OP has recently accrued £5,700 in credit card debt and taken out a loan. A big no no with a mortgage offer on the table. 

The OP could chance it and ask his solicitor to request the funds (before exchange of course) and hope the lender doesn't credit check them again. 

Conan1Sett

MaryNB said:

Octothorpe said:

Could you not exchange and complete on the same day, or am i missing something?

When the solicitor asks for release of funds the lender may do another credit check and may retract their offer because OP has recently accrued £5,700 in credit card debt and taken out a loan. A big no no with a mortgage offer on the table. 

The OP could chance it and ask his solicitor to request the funds (before exchange of course) and hope the lender doesn't credit check them again. 

No I don't want to do this. 

Tokmon

Conan1Sett said:

MaryNB said:

AdrianC said:

The sooner you talk to the lender, the better.

If this is debt consolidation, though, surely the original offer came while you had those debts? But £7,500 is a big chunk more than £2,700 + £1,600 + £400 + £1,000 = £5,700

I'm surprised they'd have accepted borrowed equity plus card debts, though. Sub-prime lender?

I think the remaining £1,800 is 

Conan1Sett said:

....to replace an existing loan that was used to make up my mortgage deposit....

You may be ok if the lender doesn't do another credit check before exchange but this is a big IF and no way of knowing if they will or not. Talking to the lender know is the only way to find out if this loan will be an issue. Did you need to replace the existing loan and consolidate your credit card debt before exchange? I realise it's too late now but in future you should never take out credit before exchange. 

These CC debts were not there during the application stage. However, several months passed and I was in a position where I was bleeding cash because I had no fixed abode. 

My financial situation is somewhat better than when I began the application but I'm just wondering if I will end up in the bin what with the new loan. 

The extra £1800 is surplus. 

You should pay back the surplus to reduce the amount of interest you are paying, no point in borrowing money and paying interest just to keep it in the bank!.

How much is your total deposit?