Extra credit before exchange/completion AFTER mortgage offer

Kathscott95

Hello, first time positing.

I appreciate that there are lots of threads in this, but some are old and contain varying levels of debt, etc.

Selling my flat and moving home...mortgage offer was recieved. At the time of the mortgage offer, I had an overdraft of £400 or so that I was in a bit of a vicious cycle with, and although I was clearing each month, I was always going back into it. I also had a CC with around £600 on it. Nothing too big basically, but I was paying interest on both. When the mortgage was agreed, I think it was something along the lines of 'debt to be cleared fully or some bla bla on or before completion) - we agreed basically that it would be paid off from the sale.

However, I had an appointment with my bank (separate, i bank with NatWest but mortgage is with halifax) and I explained my situation to NatWest that I hate being in my overdraft and would like it cleared. I explained I had a mortgage offer already and she advised a loan of £1000 to clear both the CC and the overdraft. She told me as we had our mortgage offer in place, it wouldn't impact it anyway. So I took out the consolidated loan and paid both off, so no extra debt, just all put into one, with less interest, and it's all together now. 

I didn't think much of it, but now I read how you should NEVER take out extra credit in between offer and completion, and Halifax could now reject it when they do the final hard search prior to releasing the funds. I'm so worried I've messed the whole thing up now...
For context, our deposit is coming from the sale of the property, we could probably add £6k extra and we wasn't super stretched. I've never missed a payment on anything, no bankruptcies, CCJ's, etc. My credit score prior to taking out mortgage was 969 out of 1000 on clearscore. With the search for mortgage, search for loan and the new loan showing it is now 822 out if 1000, which I am still told is good.

Snookie12cat

Kathscott95 said:

Hello, first time positing.

I appreciate that there are lots of threads in this, but some are old and contain varying levels of debt, etc.

Selling my flat and moving home...mortgage offer was recieved. At the time of the mortgage offer, I had an overdraft of £400 or so that I was in a bit of a vicious cycle with, and although I was clearing each month, I was always going back into it. I also had a CC with around £600 on it. Nothing too big basically, but I was paying interest on both. When the mortgage was agreed, I think it was something along the lines of 'debt to be cleared fully or some bla bla on or before completion) - we agreed basically that it would be paid off from the sale.

However, I had an appointment with my bank (separate, i bank with NatWest but mortgage is with halifax) and I explained my situation to NatWest that I hate being in my overdraft and would like it cleared. I explained I had a mortgage offer already and she advised a loan of £1000 to clear both the CC and the overdraft. She told me as we had our mortgage offer in place, it wouldn't impact it anyway. So I took out the consolidated loan and paid both off, so no extra debt, just all put into one, with less interest, and it's all together now. 

I didn't think much of it, but now I read how you should NEVER take out extra credit in between offer and completion, and Halifax could now reject it when they do the final hard search prior to releasing the funds. I'm so worried I've messed the whole thing up now...
For context, our deposit is coming from the sale of the property, we could probably add £6k extra and we wasn't super stretched. I've never missed a payment on anything, no bankruptcies, CCJ's, etc. My credit score prior to taking out mortgage was 969 out of 1000 on clearscore. With the search for mortgage, search for loan and the new loan showing it is now 822 out if 1000, which I am still told is good.

You should not take out a loan especially before you complete. They might credit check you prior to completion and pull the offer if they notice this.

To save any problems after exchange and risk you losing your deposit, I would call them and explain. A new loan isn't going to make them pull it instantly, but they will take it into your affordability.

Best be honest or you risk getting into a lot of trouble.

[Deleted User]

Kathscott95 said:

My credit score prior to taking out mortgage was 969 out of 1000 on clearscore. With the search for mortgage, search for loan and the new loan showing it is now 822 out if 1000, which I am still told is good.

It's not your pretend score that matters, but your credit management.

You can't undo what you've done, so I would focus on clearing that debt as fast as you can, to put yourself in the best position. And as above, make the situation known to the lender before exchange. If the mortgage is pulled, you want it pulled before exchange, not after.

Kathscott95

@Snookie12cat thanks. I have contacted my mortgage advisor but she had been on leave this week and isn't back until tomorrow. I am being honest, I just wanted to hear other people's experiences/recieve possibly be assured I haven't messed the whole thing up 

Kathscott95

@Deleted_User I'm happy to clear it if required prior to exchange. But I'd like to hear their view first obviously as it wasn't deemed a big problem when I had it as two separate accounts as it was a small amount. I know people with higher debt who have got a mortgage - it is more now the fact I had technically taken out an additional loan, to consolidate the debt into one 

LittleMissDetermined

I think it depends if your mortgage provider does another hard search. Ours didn't, they only did one hard search at the time of offering. Just before completion I took out a mobile so had a hard search from that, but lenders might view loans differently. 

If there are any significant delays, the mortgage offer may expire so I can see why it's best not to get credit until after completion. 

Hope it goes OK for you 
LMD x

Kathscott95

@LittleMissDetermined it's looking like we are going to exchange in the next week or so! I thought I'd bring it up with the advisor just to see what she says too...thank you very much! 

alex_163163

Can you pay off the loan straight away with some of the £6k extra you mention you have? 

Kathscott95

@alex_163163 we will have that upon completion from the equity! All tied up at the min. There's around 900 left on the loan at the min and I could pay off 600 or so probably easily now...
If I clear it, will it make a difference? Or will it still count that I took out a loan? 

Snookie12cat

If you pay off the loan before completion many lenders will not look at it for affordability and be okay. 
I don't imagine it will derail the whole thing, but might have to go back to the underwriter to double check it's all okay. 
I hope it goes okay for you X 

nolimit988

How far from taking the loan out to completion is it? because if it was just a month then lenders would not be able to see a loan on your credit file, as it takes 4 - 6 weeks to show on there so completion may already have been done anyway