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Wednesday, December 23, 1998 Published at 17:21 GMT


Business: Your Money

Mandelson and the loan form

Information about any other loans is vital

UK home buyers will understand why the accusations levelled at former Trade and Industry Secretary Peter Mandelson over his home loan with Britannia Building Society are so serious.

There is speculation that Mr Mandelson may not have revealed to his bank that he also had a loan of £373,000 from colleague Geoffrey Robinson.

Mr Mandelson maintains that he has done nothing wrong. He is reported to have said earlier through a spokesman that he could not recall what he had put on his loan application to Britannia, submitted two years ago.


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Home loan borrowers will know that when applying for a loan, the lender requires details of all financial commitments faced by the borrower.

Britannia has confirmed that applicants for mortgages are asked to declare all financial liabilities, including other loans.

"What we are seeking to ascertain from this is what an applicant's financial commitments are and whether they are in a position to meet commitments to the building society in respect of a mortgage," a spokesman said.

In fact, a question on the application form Britannia asks would-be borrowers to fill out reads: "Have you any hire purchase/loan agreements?"

Mandelson
If the answer is 'yes', applicants are then asked to outline how much is owed and to whom.

This information is regarded as vitally important by lenders to assess the ability of a borrower to keep up repayments.

Applicants are also asked to declare whether they had taken out any other loan or mortgage on the property to be purchased.

Finally, the standard contract signed by borrowers before a mortgage is approved ask whether "all material information" pertaining to the application has been declared.

As far as Mr Mandelson's situation is concerned, if a loan more than twice the size being applied for from Britannia has been taken out to help finance the same house purchase, this is something the lender would certainly want to know about.

A Britannia spokesman said: "If a mortgage was being met in full, there is no issue. If payments were not being met we would need to explore further. If we became aware of circumstances which suggested a mortgage application was deliberately improperly filled in, we would have to pursue that with the member concerned."





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