Can a mortgage lender withdraw a signed renewal product offer if you make an enquiry?

DeniseH_2

Can anyone advise on this?

We have a mortgage renewal product due to start in January that we have signed (3.99% so not too bad at the moment) - but we know that we can change our mind before it kicks in.

We were not able to secure additional borrowing which we wanted to be able to clear our credit cards with (not that we said that was what we wanted it for) so we have been weighing up going interest only for 2 years to clear our debt this way instead. To do this we need to speak to the lender directly and this would be underwritten.

What we don't know, is whether asking about this, risks the product we have already secured? If feels wrong if they do, but who knows??

We know about the 6month charter and the benefits of this but going interest only for 2 years would really help to get rid of the personal debt so this would be preferable - but only if the other product is still safe if they don't allow us to do this.

Thank you for your help!

DeniseH_2

To add, the renewal is with our existing lender so we have a good history with them

Strummer22

Take a step back and work out whether this is worth it before you talk to your lender (I don't know if it would make them nervous... my limited experience is that some lenders get spooked by the tiniest details!).

You would need to work out whether you'd end up paying more in interest overall if you paid that interest on your mortgage instead of your credit cards. 

As an alternative, any chance you could get a 0% interest balance transfer credit card (or cards) for some or all of your debt, after your new mortgage deal starts? You'd only pay the balance transfer fee and have the length of the interest-free  period (probably close to 2 years) remaining to pay off the credit card debt. If you do go down this route use MSE's eligibility checker first. If you're likely to be accepted for multiple cards, make all the applications at the same time so that the applications are not visible to each other lender. 

ACG

Why did you not tell them it was to clear credit cards? 
If you made an application for a further advance, you have technically committed mortgage fraud. Whilst I would say no, they are very unlikely to pull a mortgage offer because you make an enquiry, there are exceptions - such as mortgage fraud. 

Its still unlikely they will pull your offer. 

DeniseH_2

Thank you very much for your opinion - not so much for your assumption or judgement.

There was no intention to commit any mortgage fraud - our (honest) broker was looking for a good renewal product for us and advised that lenders rarely allow additional borrowing to clear credit card debt. (To save judgement on that debt too - this was built up last year travelling to provide care for a suddenly sick and now deceased parent) Instead the broker advised only to claim for the 20year old kitchen that is actually in need of replacing - but in honesty, yes... had we been granted the additional funds, I would rather be debt free in a cost of living crisis, than have a new kitchen. 

I do appreciate your help though, just not the assumption that I tried to commit fraud

ACG

We were not able to secure additional borrowing which we wanted to be able to clear our credit cards with (not that we said that was what we wanted it for)

I was going off what you wrote. 
I have not judged you. If I misread I apologise, but no matter how many times I re-read it, all I take from it is that you wanted extra money to clear credit cards but you never told them that. 

With the extra context you have provided it changes things slightly. 

I never said there was intention to commit fraud. I said if you applied for the extra money to pay off credit cards but said it was for something else, that IS mortgage fraud, regardless of your intentions. If that didnt happen, then it was not mortgage fraud. Pretty much every lender allows you to raise money to clear credit cards btw, just that some have limits. 

If I were the underwriter though, I would be wondering why you want to raise money for a kitchen revamp whilst going on interest only in order to clear your credit cards. 

MWT

ACG said:

If I were the underwriter though, I would be wondering why you want to raise money for a kitchen revamp whilst going on interest only in order to clear your credit cards. 

I started posting exactly the same point then stopped as I predicted the response from the OP.

It will raise a red flag if the reason for the need to go interest only is the credit card debt so soon after apparently planning a kitchen renovation...

DeniseH_2 said:

There was no intention to commit any mortgage fraud - our (honest) broker was looking for a good renewal product for us and advised that lenders rarely allow additional borrowing to clear credit card debt. (To save judgement on that debt too - this was built up last year travelling to provide care for a suddenly sick and now deceased parent) Instead the broker advised only to claim for the 20year old kitchen that is actually in need of replacing - but in honesty, yes... had we been granted the additional funds, I would rather be debt free in a cost of living crisis, than have a new kitchen.

Your 'honest' broker is doing you no favours by encouraging you to state reasons that are not 100% true. By your own statements you would not have used the funds for the stated purpose had you been successful, that is a very clear statement of your intent...

This isn't about 'judgement' or any negative attitude towards your credit card debt, however it was incurred, it is simply trying to help you avoid the position where following unwise advice from someone who really should know better could lead to having a huge problem getting any credit at all for a long period of time...

ACG

MWT said:

This isn't about 'judgement' or any negative attitude towards your credit card debt, however it was incurred, it is simply trying to help you avoid the position where following unwise advice from someone who really should know better could lead to having a huge problem getting any credit at all for a long period of time...

This is a really good point. 
I have not asked about the credit card debt or how it was raised. Most of what I do is help customers with bad credit. If I judged people, I would be out of business. Having sene bad credit and lots of debt first hand (through family members), I know there are usually reasons and I actively try to help people who are struggling. 

I have seen people with over £100k in loans and credit cards. Some of them I have been able to help. 

kingstreet

Additional borrowing criteria;-

https://www.nationwide-intermediary.co.uk/products/additional-borrowing

Debt consolidation permitted upto 80% of property value.

fergie_

Slightly different perspective, but can you afford the product transfer (repaying interest and capital) while servicing the unsecured debt?

If the answer is yes, then take the product transfer and throw what you can at clearing the unsecured debt. If you can, shift it to 0%,or potentially speak to the card company and see if they can help with the interest due to the exceptional circumstances.

If the answer is no, are more extreme options such as moving to a cheaper property an option?