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Condition on mortgage to pay all the outstanding credit commitments before completion

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Muds1
Muds1 Posts: 83 Forumite
in House buying, renting & selling
Hi All


I have received mortgage offer for the property am looking forward to purchase.


While I applied for this mortgage I declared an existing car loan.
It was an electronic form and there was an option "Will you replay some or all of your outstanding credit commitments" and I said Yes to it. (Considering monthly payments going towards this loan. that repay it in part.)


Now the mortgage offer has a condition that all such commitments to be repaid before completion.


----


Here I want to ask,


1. if this is a general statement of offer, or is lender Serious about me paying off my car loan or else the mortgage offer will be declined ?


2. Can I ask mortgage lender to remove this condition ? if so, what are the chances of them removing it ?

3. At what point will the lender check if I have repaid the said loan ?


Any guidance will be highly regarded.


Thanks
M.
«13

Comments

  • ellie27
    ellie27 Posts: 1,097 Forumite
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    You have just reminded me that is a condition on our offer too! We have a couple 0% credit cards around £7k total.

    I am not expecting the solicitor to check if they are paid or not when it comes to him requesting the funds from the lender. I would have thought if I could show the solicitor a couple of other savings accounts with more than enough money to cover that amount then he would be happy with that? I will need to ask him!
  • Malmo
    Malmo Posts: 710 Forumite
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    See in-line replies in red...
    muditmalhotra wrote: »
    Hi All


    I have received mortgage offer for the property am looking forward to purchase.


    While I applied for this mortgage I declared an existing car loan.
    It was an electronic form and there was an option "Will you replay some or all of your outstanding credit commitments" and I said Yes to it. (Considering monthly payments going towards this loan. that repay it in part.)


    Now the mortgage offer has a condition that all such commitments to be repaid before completion.


    ----


    Here I want to ask,


    1. if this is a general statement of offer, or is lender Serious about me paying off my car loan or else the mortgage offer will be declined ?
    It is a condition of the mortgage offer and if your declaration is inaccurate, then it will be mortgage fraud. If there will be any outstanding credit commitments such as your car loan remaining after completion (when you get the keys), then that will be considered as an outgoing commitment in affordability calculations, thus affecting your borrowing power. You appear to have declared that you will in fact clear the outstanding loan balance before completion, which means that your affordability and hence your borrowing power is based on there being no outstanding credit commitments. This is why the mortgage offer contains the condition.

    2. Can I ask mortgage lender to remove this condition ? if so, what are the chances of them removing it ?
    No, you can't. The offer reflects whatever you declare about your credit commitments at the time of submitting your application

    3. At what point will the lender check if I have repaid the said loan ?
    It will be your solicitor's legal responsibility to the mortgage lender to verify your declaration that you will clear any credit commitments such as your car loan before completion


    Any guidance will be highly regarded.


    Thanks
    M.
  • Muds1
    Muds1 Posts: 83 Forumite
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    Malmo wrote: »
    See in-line replies in red...



    Thanks Malmo, but I truly intended to repay the part of outstanding loan and that's what I agreed to




    exact wording of condition is -- "You have declared an intention to repay some or all of your outstanding credit commitments The mortgage advance has been assessed on this basis and it is your responsibility to ensure that these commitments are repaid. Completion takes place on the condition that such repayments takes place."


    I agreed to pay some of it not all, this puts me in a terrible position then :(
  • *Robin*
    *Robin* Posts: 3,364 Forumite
    First Anniversary Combo Breaker First Post Stoptober Survivor
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    Would selling the car raise enough to pay off the loan (and buy a banger)?
    I'd rather drive an old car for a while than risk losing the opportunity to buy a home...
  • mrginge
    mrginge Posts: 4,843 Forumite
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    ellie27 wrote: »
    You have just reminded me that is a condition on our offer too! We have a couple 0% credit cards around £7k total.

    I am not expecting the solicitor to check if they are paid or not when it comes to him requesting the funds from the lender. I would have thought if I could show the solicitor a couple of other savings accounts with more than enough money to cover that amount then he would be happy with that? I will need to ask him!

    You aren't expecting the solicitor,(who works for the lender) to check that the terms laid out by the lender have been adhered to before requesting the funds.
    Interesting approach. Still it's only a legal declaration about the most expensive thing you'll ever buy.
  • Muds1
    Muds1 Posts: 83 Forumite
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    I know my options like selling car or paying it somehow, but what I want to be sure is that when I agreed to pay in part, why this condition ?


    can I not talk to lender to reconsider this as I never agreed to pay in full.
  • ellie27
    ellie27 Posts: 1,097 Forumite
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    mrginge wrote: »
    .... solicitor,(who works for the lender) to .

    I thought the solicitor worked for me?

    Its no problem, my credit cards can be paid off right now so I am not worrying. I will ask our solicitor when we sign missives.

    Thanks
  • lovehackney
    lovehackney Posts: 162 Forumite
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    Hi Ellie,

    I had a similar condition on my mortgage offer last year (the broker ticked yes on the application without me knowing).
    As it happens, I did pay off all my credit commitments before the mortgage was completed, but my solicitor never checked this and also our lender Woolwich, wouldn't have known if we had either.

    Don't know if that helps..
  • LandyAndy
    LandyAndy Posts: 26,377 Forumite
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    ellie27 wrote: »
    I thought the solicitor worked for me?

    Its no problem, my credit cards can be paid off right now so I am not worrying. I will ask our solicitor when we sign missives.

    Thanks


    Your solicitor wears two hats and works for both you and the lender in the transaction. You have to pay for both hats though.
  • HouseBuyer77
    HouseBuyer77 Posts: 961 Forumite
    Combo Breaker First Anniversary
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    2. Can I ask mortgage lender to remove this condition ? if so, what are the chances of them removing it ?
    No, you can't. The offer reflects whatever you declare about your credit commitments at the time of submitting your application

    I don't see any reason why you can't ask for this to be removed. Perhaps the underwriter just removed the car loan from your affordability calculations and if they put it back in they'd still be happy to lend. Perhaps you're just on the limit of your affordability and not paying off the car loan is a critical thing.

    There's nothing wrong with asking your solicitor about this or just asking the lender directly, the worst they can say is no.

    Though they might say yes but it'll require a new mortgage application which will incur further delay and cost.
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