Mortgage and old loans

MissyCO

Hi there, was hoping for some advice. We have been approved in principle but there are some conditions.

One is that I am made permanent in my new job, hoping that will happen soon.
The other is that we pay off our old loans before we draw down the mortgage. OR... And this is the bit I am struggling with...
" You can request your solicitor provide a solicitor undertaking where he is certifying in his undertaking that the loans will be cleared on drawdown by you."

So would we be able to ask a solicitor to do this for us? And would this letter be legal, if we were to take a year or so to pay off our old loans. Is that something you just don't admit... Who would check up on that?

Hope all that makes sense!

Other info;

We have two loans, 4K each, that we are paying off as quickly as we can, but it will probably take us a year or so to clear them. We can afford mortgage & old loan repayments, as our rent is high as it is and we are lucky enough to have a deposit we were gifted.

All advice gratefully received.

Fred Swanson

This post has been deleted.

MissyCO

Fred Swanson wrote: »

It is standard enough for solicitors to cut cheques to clear off any old loans on drawing down a mortgage.

Yes but I'm asking if they would write the letter even if you weren't in a position to pay off old loans in a lump sum right away.

Marcusm

MissyCO wrote: »

Yes but I'm asking if they would write the letter even if you weren't in a position to pay off old loans in a lump sum right away.

You mean would a solicitor commit an offence of obtaining the use of funds by deception? Any solicitor who would facilitate you in this manner would not be worth dealing with. If you cannot clear the loans at the time of drawdown then you need to go back to the lender and seek a waiver of this condition.

4ensic15

No solicitor would write such a letter. The solicitor would become personally liable to pay the loans if the o/p didn't. The only way it could be done is if the mortgage was higher and there was enough money coming in to buy the house and pay off the loans.

Pro Hoc Vice

MissyCO wrote: »

Yes but I'm asking if they would write the letter even if you weren't in a position to pay off old loans in a lump sum right away.

You mean fraud. I had to check my diary to see if it was 2006 not 2016.

A undertaking by a solicitor is his promise to do something,

Pat Mustard

MissyCO wrote: »

Yes but I'm asking if they would write the letter even if you weren't in a position to pay off old loans in a lump sum right away.

It's not just a letter. It is a solicitor's undertaking. This is a binding promise which the solicitor must keep. Solicitors who breach their undertakings are brought before a disciplinary tribunal and hauled over the coals.

In order to give an undertaking, a solicitor must have sufficient control over the relevant circumstances. If the undertaking is to discharge a debt, he/she will need to exercise control over enough money to be able to discharge that debt.

You ask if the solicitor will undertake to ensure that your existing debts are paid off, without having the money to pay off those debts. In order to give this undertaking, he/she will need sufficient control to ensure that the the old debts will be discharged. Therefore, unless the old debts are to be discharged by the new loan monies, the solicitor will need the money from you. Otherwise, he/she will not have sufficient control to ensure that the debt will be discharged.

Therefore, to answer your question, the solicitor cannot give this undertaking without having control over the money. The answer must be no.

dats_right

No, a solicitor will not provide this undertaking unless your two existing loans are being discharged on or before the drawdown of your mortgage. You should focus on paying of your existing loans as soon as possible.

TonyCochrane

4ensic15 wrote: »

No solicitor would write such a letter. The solicitor would become personally liable to pay the loans if the o/p didn't. The only way it could be done is if the mortgage was higher and there was enough money coming in to buy the house and pay off the loans.

The solicitor would become personally liable to pay the loans if the o/p didn't.

This is not accurate, a solicitor who breached an undertaking would be subject to disciplinary action by the Law Society and might be responsible for losses the bank suffered in relying on their undertaking if the bank took an action against him or her.

A solicitor might give such an undertaking if part of your new mortgage drawdown went straight away to paying off your existing loan immediately and in full. The funds would naturally have to be within the control of the solicitor.

Claw Hammer

TonyCochrane wrote: »

The solicitor would become personally liable to pay the loans if the o/p didn't.

This is not accurate, a solicitor who breached an undertaking would be subject to disciplinary action by the Law Society and might be responsible for losses the bank suffered in relying on their undertaking if the bank took an action against him or her.

A solicitor might give such an undertaking if part of your new mortgage drawdown went straight away to paying off your existing loan immediately and in full. The funds would naturally have to be within the control of the solicitor.

If a solicitor does not comply with an undertaking to a financial institution he can face a motion in the High Court from the financial institution seeking to force him to comply with the undertaking. That is in addition to any disciplinary action the solicitor may face from the Law Society.

VincePP

The bank reckons that paying the two loans and a mortgage would be a struggle for you, hence the insistence on clearing the loans.

It is a condition of the mortgage drawdown and you must abide by it.

A solicitor will not under any circumstances whatsoever allow drawdown of mortgage and not have the loans paid off.

You could possibly look for a new loan over a longer period that would pay off the current 2 loans.

Another option - depending on the mortgage you got, is to get an increased mortgage so that it would allow the loans to be paid from the mortgage. Though if you are at 90% value, this will not be possible