Clearing loans before applying for mortgage

sunnygirl

Hi - this follows my earlier post asking for advice re my eligibility for a mortgage, and it was suggested i should ideally clear the 5k car loan i have before applying, to maximise the loan amount i would be offered....
I've heard of people 'not declaring' Credit Union loans they had when they applied for a mortgage - Can the banks find out if you have a credit union loan (if you dont mention it on your application?) - I only ask as it would be easier for me to clear my Car Finance loan (from the bank) as suggested with a credit union loan - that way I have no loans showing with the banks themselves - i hope this makes sense?

Many thanks

sunnygirl:)

Duckjob

Thats the worst thing you could do in these uncertain times IMO.

Why would you take out a loan that will cost you more to service (just to get deeper in debt to the bank), instead of paying it off the loan from your savings?

A sly off-the-books loan to pay off another loan so the bank will loan you more? Thats the sort of silly bubble-buyer activity that helped get us into this mess.

Are you trying to put yourself into financial difficulties?

Owen

Unfortunately, these days as far as I know, the Credit Union loans also show on the Bureau, so if you get a CU loan to clear a bank loan, it will still be visible to the bank when they credit score you.

Duckjob

PaintDoctor wrote: »

Unfortunately, these days as far as I know, the Credit Union loans also show on the Bureau, so if you get a CU loan to clear a bank loan, it will still be visible to the bank when they credit score you.

Fortunately, I'd say. Irresponsible borrowing was as much a problem in the bubble era as irresponsible lending.

spockety

sunnygirl wrote: »

Hi - this follows my earlier post asking for advice re my eligibility for a mortgage, and it was suggested i should ideally clear the 5k car loan i have before applying, to maximise the loan amount i would be offered....
I've heard of people 'not declaring' Credit Union loans they had when they applied for a mortgage - Can the banks find out if you have a credit union loan (if you dont mention it on your application?) - I only ask as it would be easier for me to clear my Car Finance loan (from the bank) as suggested with a credit union loan - that way I have no loans showing with the banks themselves - i hope this makes sense?

Many thanks

sunnygirl:)

You are attempting to disguise your real ability to repay a mortgage to a bank.

If you need to do that, it probably means you actually can't afford the level of mortgage you are hoping to take out.

Go to your bank, lay it all on the table, loans and all, and they will tell you what kind of mortgage you can probably afford at your income level while continuing to service existing loans.

ntlbell

as house prices continue to drop use this time to clear off the loans

by the time it's cleared you might have saved yourself 20/30k or so.

robbing peter to pay paul is starting off on the wrong foot.

the banks don't have these restrictions to annoy you.

Paulw

I had a number of outstanding loans when I applied for my mortgage (and got it). I had a bank loan (5k) and a credit union loan (3k) for different things.

All I had to do was prove that I could afford the loans and mortgage.

Don't worry too much.

Giggy

So does anyone know for a fact whether or not the bank can trace credit union loans?

Klingon Hamlet

Giggy wrote: »

So does anyone know for a fact whether or not the bank can trace credit union loans?

Some Credit Unions are members if the Irish Credit Bureau. Some are not. It depends on whether your particular one is.

havana

I assume you're saving towards a deposit! I would either use some of that to clear the loan or hold off on the saving for a few months and throw everything you can off the loan each month to clear it. You'd be surprised how quickly you'll have your savings built back up. Believe me It's not worth the stress when you have an application in, worrying if they'll find the loan. And when you do buy and move in that extra each month will be great towards all the expenses. And believe me there are a lot.

Victor

Honestly, declare the loan and demostrate your ability to pay it off.

GerardKeating

Giggy wrote: »

So does anyone know for a fact whether or not the bank can trace credit union loans?

As an earlier poster said, some are in the ICB, many are not.

But Banks aint stupid, they know people try this, and the look at your bank statement for cash withdrawls which might be used to cover a loan.

Also, they might want to know how you cleared the loan and want proof of this.

stam1122

Hi,
the credit union loans does not appear on the credit check.
It didnt appear on mine which was last month ,also the bank manager didnt want anything too know about it,....
We got the deposit in credit union.....

orchidsrpretty

If you have a standing order coming from your bank acc to the CU the mortgage lender will want proof that it not for paying off a loan. If not, you dont have to declare it.

sunnygirl

Hi guys OP here

Thanks for all your answers - I am not trying to be 'dishonest' about what loans I have! - I had been told having a bank loan stands against you when applying for a mortgage! I have built up some savings for a mortgage deposit, so generally the advice is just keep the bank loan and take a chance with my mortgage application, or stop saving and pay off car loan (with an early payment penalty probably) instead? It would take me probably 7-8 months to clear off the car loan if I put no money into the savings account - this would look better to the banks?!

Victor

sunnygirl wrote: »

or stop saving and pay off car loan (with an early payment penalty probably) instead?

You would need to check, but I've not heard of such penalties on car loans.

spockety

Victor wrote: »

You would need to check, but I've not heard of such penalties on car loans.

Car loans are usually fixed rate.

You will probably find that the outstanding balance will be the total repayments over the lifetime of the loan minus the amount paid off to date. In other words, the bank get paid in full no matter what!

Check your loan agreement, or easier still just call them and ask for a loan settlement figure.

She Devil

There are only two credit unions in the country on the ICB records.

Firetrap

Why are you in such a hurry to get a mortgage may I ask? Would you not be better to clear off your loan first over the next 7-8 months and then see where you stand? Or, if you are in such a rush to get a mortgage, why don't you get your finger out and clear that debt sooner?

Klingon Hamlet

She Devil wrote: »

There are only two credit unions in the country on the ICB records.

That's untrue

Firetrap

At a rough count, there are 64 of them which are members or are in the process of becoming members. I don't blame them either to be honest.

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