# Borrowing after credit check??



## 2004XYZ (16 Nov 2004)

Hi,

Fantastic website, GREAT advice!

I've just had my offer accepted on a house (have paid my booking deposit) but the owners aren't moving til June. 

This gives me time to find the money for the stamp duty (just under E15,000), I have everything else sorted (ie deposit and misc fees).

I know the usual 'trick' is to borrow from the credit union after your mortgage provider completes its credit check but I was wondering if this is still the best way, are there any decent alternatives?

Is there any one out there who has had to borrow for stamp duty or a deposit? How did you do it? Gory details please?!

Thanks,

Anne


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## Kerry (17 Nov 2004)

*Borrowing form Credit Union*

I recently borrowed from the credit union for my deposit and to clear off exsisting loans etc. I borrowed before submitted my mortgage application because as far as im aware credit union loans dont show up in the banks checks anyway.  I then transferred the loan amount into another credit union account, and used this as proof of savings.


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## rainyday (18 Nov 2004)

*Re: Borrowing form Credit Union*

At least 4 credit unions now provide details of loans to the Irish Credit Bureau and would show up when the banks check your record.


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## 2004XYZ (18 Nov 2004)

*Re: Borrowing form Credit Union*

Thanks Kerry, I'll be taking a similiar route.

Rainyday, I'm aware a lot of credit unions now show up on your credit check, the trick is to borrow from the ones that don't yet fall under that umbrella. And even after doing that I'll still be 500% more ethical than your average financial institution - don't start me.


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## Chord of Souls (19 Nov 2004)

*Ethics*

Interesting. So if you can find a reference point that is less ethical than yourself, that makes your actions justifiable?


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## 2004XYZ (19 Nov 2004)

*Re: Ethics*

No Chord of Souls, I never used the word 'justifiable', I just implied necessity. I live in the real world, unfortunately. ;-)


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## WizardDr (19 Nov 2004)

*The Deposit or stamp duty*

One of the secrets that first time buyers need to know that this is a time when your parents - even if you are 60 - will part with wads of cash without any requirement for repayment.

Even if your old fella never gave you a cent, I assure you with 89.5% success that he will assume you have finally matured when buying a house (God bless Tom and Mick Bailey!) and will be 'happy' to help


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## dubinamerica (19 Nov 2004)

*.*

OK WizardDr - we don't all have parents that have wads of cash to be able to hand over !! Not everyone can go running to parents to get a step on the housing ladder. 
I'm sure there's plenty of other people that cannot or will not turn to their parents and put them into an extremely difficult position of handing over a large sum of money at a time when they're own earning potential may be in decline.  It is totally unfair to EXPECT parents to do that .


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## Kerry (19 Nov 2004)

*Re: .*

Here here dublin america!.  At this age of my life id find it embarrassing to be financially dependent on my parents - its bad enough that im 27 and still living with them! Id rather lie to a bank any day about savings than to put that sort of pressure on my parents in their retirement. And even if i was to take money from them (not that i would) what about my 5 brothers and sisters would the same be expected for them ?!


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## Chord of Souls (19 Nov 2004)

2004XYZ, 

Why were you comparing your actions to those of "your average financial institution", then?


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## MichaelL (19 Nov 2004)

*Smoke and Mirrors*

All this borrowing and moving funds around to exhibit proof of savings is all well and good, but the money does all have to be paid back eventually, so ultimately you are ony kidding yourself


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## Sarah Wellband (19 Nov 2004)

*A cautionary tale*

A little off topic but I just had an enquiry from a couple who have only lived in their house for 6 months and have almost €30,000 of unsecured debt on top of a mortgage that can only just be covered by the husband's wages as the wife has given up work. Absolutely no chance of  a remortgage - other than spending every cent on covering the repayments their only other option is to sell up and start again.

Sorry to be so negative on a sunny Friday.....

Sarah

www.rea.ie


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## 2004XYZ (19 Nov 2004)

*Re: A cautionary tale*

Chord of Souls, I have to assume you work for a financial institution or have very generous parents! Count your blessings, it's tough out here in the real world!

I was alluding to earlier discussions on this website (perhaps you're a newcomer) about the 'morality' of concealing borrowings from banks. My conclusion is that those who object are probably the ones who get Mummy and Daddy to provide the bulk of the funding for their new homes. 

I agree completely with the last couple of contributors, I have no time for those who expect or look for help from their parents when it comes to financing the purchase of a house, at that stage I think our parents have done more than enough for us. 

As to my dig about the banks and ethics - where do I start? How about the DIRT tribunal and the endless flow of perjury? Or the overcharging. Or...AIB? 

I quote from the Sunday Business Post (July 11, 2004): For those who don't have parents donating large sums to slush fund, imagination is required. Many first-time buyers are borrowing thousands of euro from their local credit union towards their deposit. This is because it doesn't show up on credit checks conducted by the banks, according to mortgage sources. They lie to the lender, claiming the loan will be used to buy a car, to fund further education, travel and so on. It's unethical, but banks can hardly claim the moral high ground on ethics.

Hear, hear!


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## ClubMan (19 Nov 2004)

*Re: A cautionary tale*

*My conclusion is that those who object are probably the ones who get Mummy and Daddy to provide the bulk of the funding for their new homes.*

Have I missed something? I don't see where _Chord of Souls_ expressed any opinion on this specific issue so I'm not sure why you're having a go at him/her.


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## Chord of Souls (19 Nov 2004)

*"...I'm aware a lot of credit unions now show up on your credit check, the trick is to borrow from the ones that don't yet fall under that umbrella. And even after doing that I'll still be 500% more ethical than your average financial institution..."*

2004XYZ, you're veering away from my point.  As ClubMan has pointed out, I have not expressed any opinions on the subjects of parents providing help to their offspring to buy houses on Askaboutmoney.  

I was noting that I found the construction of your comment above interesting.  You made reference to what other financial institutions are doing/have done.  I am in absolute agreement that certain financial institutions have exhibited very low ethical standards.  Many continue to do so.  

But your post implies that you are aware your own proposed actions are unethical, but seeing as the financial institutions themselves are more unethical in your opinion, this in some way absolves you.


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## Chord of Souls (19 Nov 2004)

*Separate point*

By the way, for anyone who considers borrowing deposits and concealing it from mortgage lenders, I would throw in the following note of caution...

Q. Why do you have to conceal it from the mortgage lender?
A. Because if the mortgage lender knows about the other borrowing, they won't lend you the required mortgage.
Q. Why won't they?  Is it because they don't want to lend out money?
A. No. Mortgage lenders are in the business of lending money.  They want to lend out as much of it as possible to as many people as possible.  *If they refuse to lend someone money, it's because they don't believe the person has the ability to repay it.*  Maybe you can repay it in today's low-rate environment, on the salary you currently enjoy, but will this always be the case?  Lenders' credit policies are based on many years of experience of many sorts of economic environments.


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## Kerry (20 Nov 2004)

*Re: Separate point*

*All this borrowing and moving funds around to exhibit proof of savings is all well and good, but the money does all have to be paid back eventually, so ultimately you are ony kidding yourself* 

Thanks for the opinion Michael but id be kidding myself more if i thought that i could save for a deposit and buy a house in a few years - at the rate that house prices are increasing at the moment i had to take the risk because if i waited any longer i would have shut myself out of the house market totally.  
Obviously if i didnt think i could afford the loan repayment on top of the mortgage i wouldnt have taken out the loan.  I think that im best to assess what i can afford to pay back per month, not some bank official using a repayment calculator which "fits all"


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## 2004XYZ (20 Nov 2004)

*Re: Separate point*

CHORD OF SOULS

I have already explained what I was alluding to (ie earlier discussions on the subject of concealing borrowings), there's really nothing intriguing about the construction of the comment. You may seek intrigue, but it doesn't mean you will find it!!

It was a simple, jokey but heartfelt throwaway comment ("….and even after doing that I'll still be 500% more ethical than your average financial institution - don't start me"), one with which I believe most people who deal with Irish financial institutions empathize. 

Quite why you feel the need to analyse and re-analyse it I'm not quite sure. Hence my deduction that you must work for such an institution!

"Your post implies that you are aware your own proposed actions are unethical". 

LIGHTEN UP, FOR GOD'S SAKE! Just to reassure you: I am 100% certain that I will be able to repay my stamp duty loan along with every other debt I will accrue on the road to purchasing a home. My finances are almost worn away from being analysed by a fine toothcomb! Nobody will be left short by my actions. My conscience is, therefore, clear.  

You may actually be intrigued to learn that my mortgage lender has just suggested I borrow my stamp duty from a credit union – he has even advised me on the timing of my loan request and exactly where to go. Looks like we're all playing the same game.    

My point about parents….I know very few 25-35 year-olds who are in a position to fully fund the purchase of a new home on their own. Many, like myself, might have enough earnings and savings to cover their deposit and their monthly mortgage repayments, but find the stamp duty a step too far. 

I can therefore only assume that the majority of those who find this 'struggle' incomprehensible – or, indeed, regard any 'imaginative' attempts to go it alone, rather than expect their parents to share some of the burden of the debt, as 'unethical' - must be in a position where someone else (most likely a parent) is helping them out. Good for them, my opinion is simply that house buyers shouldn't look for help from their parents, they should stand on their own two feet, as our parents had to.  

As to your second post – forgive me, but have you ever attempted to get a mortgage on your own? 

ie "If they refuse to lend someone money, it's because they don't believe the person has the ability to repay it."

Nonsense. Are you not aware that most mortgage lenders are only in the business of lending 92% of the cost of a home? That leaves 8% for the buyer to find, plus whatever is the cost of the stamp duty. That is how it works. 

I am lucky enough to be able to comfortably afford my mortgage repayments and to put up the deposit for my home. I am also lucky enough to be able to afford to repay a loan for my stamp duty, I just don't have 15,000 spare euro to fund my stamp duty at this moment. As I said before, tragically, I live in the real world!


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## rainyday (20 Nov 2004)

*Re: Separate point*



> Just to reassure you: I am 100% certain that I will be able to repay my stamp duty loan along with every other debt I will accrue on the road to purchasing a home. My finances are almost worn away from being analysed by a fine toothcomb!


What level of interest rate increases have you built into your analyses?



> You may actually be intrigued to learn that my mortgage lender has just suggested I borrow my stamp duty from a credit union – he has even advised me on the timing of my loan request and exactly where to go. Looks like we're all playing the same game.


I presume you are referring to a mortgage broker? He has no long-term interest in your welfare. His sole interest is in closing the mortgage deal so he gets his commission and/or fees. If he can talk you into taking out a bigger mortgage in order to maximise his commission, he will probably do so?



> Nonsense. Are you not aware that most mortgage lenders are only in the business of lending 92% of the cost of a home? That leaves 8% for the buyer to find, plus whatever is the cost of the stamp duty. That is how it works.


When I got my mortgage 10 years ago, the maximum available was 95%. Why do you think the banks will only lend 92%, given that they are in the business of lending money?



> I am lucky enough to be able to comfortably afford my mortgage repayments and to put up the deposit for my home. I am also lucky enough to be able to afford to repay a loan for my stamp duty, I just don't have 15,000 spare euro to fund my stamp duty at this moment.


So is there no property (maybe smaller, or in a less-attractive location) which you could fund without having to borrow a deposit elsewhere?


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## 2004XYZ (21 Nov 2004)

*Re: Separate point*

"When I got my mortgage 10 years ago....".

I rest my case!


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## rainyday (21 Nov 2004)

*Re: Separate point*



> I rest my case!


without answering any of those tough questions....


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## 2004XYZ (21 Nov 2004)

*Re: Separate point*

For fear you won't sleep, here are the answers (I'm beginning to suspect you fear this might actually work out for me!!):

Q: What level of interest rate increases have you built into your analyses?

A: Like everyone who attempts to budget for buying a home these days (.........and not 10 years ago ;-).....) I have estimated what my repayments might be should interest rates rise sharply (very sharply, which, inevitably, they will). I am still happy with the figures. I currently earn three and a half times my monthly mortgage repayment and that salary is guaranteed to rise each year. I am, therefore, as confident as anyone can be in this situation.

Q: I presume you are referring to a mortgage broker? He has no long-term interest in your welfare. His sole interest is in closing the mortgage deal so he gets his commission and/or fees. If he can talk you into taking out a bigger mortgage in order to maximise his commission, he will probably do so?

A: Incorrect, I was referring to advice received directly from the bank with which I am taking out a mortgage. I am fully aware brokers are only interested in their commissions – that's why I didn’t use one!

Q: When I got my mortgage 10 years ago, the maximum available was 95%. Why do you think the banks will only lend 92%, given that they are in the business of lending money?

A: I repeat: that was 10 years ago. If you were familiar with today's practices you would know that the general 'policy' is a 92% loan, unless you belong to certain professions (mainly medical). Yes, of course, they're in the business of lending money but not lending 100% the cost of a new home. 

Q: So is there no property (maybe smaller, or in a less-attractive location) which you could fund without having to borrow a deposit elsewhere? 

A: You didn't read my earlier posts, I don't need to borrow my deposit, only the stamp duty. Why not buy in a less attractive location? Why on earth would any one do that when they can arrange to borrow their stamp duty from a credit union (as the bulk of first time buyers do these days), can afford to repay the loan and, thus, end up living in a decent area, in a decent home, which they can afford?


I'm detecting an extraordinary begrudging, almost resentful tone from existing home owners on this site towards those attempting to buy their first homes. Rather than being encouraging you are opting to be niggardly, mean-spirited and alarmist, as if we are entering this process in the belief that our purchase is no more significant nor costly that a bag of spuds. Chill out everyone, and don't be so begrudging…..mind you, this IS Ireland!


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## 2004XYZ (21 Nov 2004)

*Re: Separate point*

On second thoughts....I'm really sorry that I bothered posting the last response. 

_Abuse deleted_


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## lapxp (21 Nov 2004)

*RE:Seperate Point*

I have to say I agree with 2004XYZ here.  There was too much negativity towards what she is trying to do....get on the property ladder in the only way a person can.  

I think it was a bit unfair by Chord of Souls to come back with "seperate point".
Especially....... "Maybe you can repay it in today's low-rate environment, on the salary you currently enjoy, but will this always be the case? Lenders' credit policies are based on many years of experience of many sorts of economic environments"

It has been said on this website on many occasions that nobody has a crystal ball regarding interest rates and job security and if that is always to be the case we can only plan for tomorrow on what we have today and make the best of it. 

The way I read the thread, 2004XYZ was basically saying that she appreciated that lying/giving false information/white lies/hiding the facts....call it what you will, is not the best way of doing business but if needs be, so be it, and if the bank found out they could hardly come back to her and complain about her methods of achieving the full loan with any moral highground to stand on.

If the average house buyers were to play it by the book
and be totally honest with the financial institutions then the majority of houses that would be sold nowdays would be to homeowners with massive equity in the property they bought in the last 10-20 years.

House buyers took a chance back then when interest rates where high and I am sure they worried then about what would happen if rates went up even further.

Its no different now to when it was then.

Rgds
Lapxp


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## rainyday (21 Nov 2004)

*Re: RE:Seperate Point*

Hi 2004xyz - Don't shoot the messenger. You may not like what I have to say, but don't attack me or label me for saying it. You can of course choose to ignore me

Let me clarify a number of issues;

I never made any comment that you should or shouldn't proceed with your purchase. I don't really have an opinion on this, as there is insufficient information available. I would never discourage any FTB from proceeding with a purchase which they can afford. Indeed, I have a track record on this board of encouraging FTBs not to try to time the market, and to buy when they see the house they can afford. I clearly understand that most people have to stretch themselves with their first house purchase. Indeed, I recall having to borrow £3k at short-notice from a family member to be repaid from the FTB grant, when a promised gift from elsewhere failed to materialise. I recall living for over a year on concrete floors & floorboards as we could not afford carpets. I recall walking to school in bare feet after working an 18 hour shift down the mine yada yada yada....

I asked some questions which raise some important issues with you and all FTBs should be thinking about. The absence of specific answers (i.e. what actual level of interest rate rises did you build into your calculations, why do banks generally not lend 100%) is somewhat worrying to me.

However, the most worrying comment is 'If you have nothing encouraging to say PLEASE say nothing!' - that is contrary to the culture here on AAM. The ethos of this board is not about offering encouragement, it is about offering hard financial facts and relevant opinions. If you only want encouragement, I'd suggest you are posting in the wrong place. If you want information, stay around here.


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## ClubMan (22 Nov 2004)

*Re: RE:Seperate Point*

*However, the most worrying comment is 'If you have nothing encouraging to say PLEASE say nothing!' - that is contrary to the culture here on AAM. The ethos of this board is not about offering encouragement, it is about offering hard financial facts and relevant opinions. If you only want encouragement, I'd suggest you are posting in the wrong place. If you want information, stay around here.*

Have to agree with _Rainyday_ there.


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## Kerry (22 Nov 2004)

*The ethos of this board is not about offering encouragement, it is about offering hard financial facts and relevant opinions.* 
Im just wondering so, what do rainyday and clubman recommend that 2004xyz do to raise the stamp duty for her house.  Also have they any other opinions on what FTBs should do when attempting to raise a deposit for a house?  What other options are open to us ?? (apart from the borrowing from parents route which i have already expresed an opinion on!)


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## Chord of Souls (22 Nov 2004)

*.*

I don't believe what I do for a living is anyone's business on Askaboutmoney.com.  I choose to remain anonymous, as do all the other posters on this thread (with the exception of Sarah Wellband).  If I was trying to use the board to plug a particular commercial service, I could understand why the Moderators would seek for me to clarify if I had a link with that service, but I'm not.  I'm expressing some personally-held opinions.  So please don't try to personalise this debate by surmising about what I do for a living.  Whether I'm a student on grant money renting a bedsit or a multi-billionaire is irrelevant to my opinions.     

It seems some posters don't like my opinions.  That, surely, is the nature of debate.  

Of course I'm very aware of the pressures on home-buyers.  I am aware that many people are faced with a choice of lying to a lender to secure the loan they require, or losing the house they like (and possibly seeing it soar further beyond their means).

But why not admit "What I'm doing is unethical but I'm going to do it anyway because I feel I have to?"

In relation to my second point, I am simply stating that borrowing left, right and centre to fund a house purchase, when professional lenders are suggesting you can't afford the overall package is a very risky business.  

Now I feel I have made my points clearly enough.  Do feel free to disagree with them, but please refrain from any attempts to personalise what is otherwise a straightforward debate.


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## rainyday (22 Nov 2004)

Options would include;

- Save for a period until the funds for stamp duty are available without borrowing
- Purchase a smaller/cheaper property to avoid the need for short-term borrowing.

Note that I did not say and am not saying that 2004XYZ should absolutely not borrow for the deposit. I am saying that she should think & plan very carefully before going down this road.

The other important issue in this debate is that by going out & borrowing, the buyers are indeed fuelling the property price increases that we have seen over recent years, at the expense of the interest payments which they will be facing during their first few years as home-owners. It is a vicious circle.


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## ClubMan (22 Nov 2004)

*Im just wondering so, what do rainyday and clubman recommend that 2004xyz do to raise the stamp duty for her house. Also have they any other opinions on what FTBs should do when attempting to raise a deposit for a house? What other options are open to us ?? (apart from the borrowing from parents route which i have already expresed an opinion on!)*

It is quite possible that in some cases people have to face up to the fact that they cannot reasonably afford to buy without lumbering themselves with an unmanageable level of debt. Until they can it might be prudent to hold off.


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## Kerry (23 Nov 2004)

Points taken and thanks for the advice, however i have stalled on buying a house for the past few years for some of these reasons, and regret it now as while ive waited, ive seen house prices soar.  Ive now decided to go for it because if i wait any longer ill never be able to afford a home. 
Therefore im wondering if it was a toss up between stopping contributions to an SSIA account (which is due to mature in April 2007) and paying all the relevant penalities DIRT etc .....or borrowing for a deposit and paying off this debt at the time that this SSIA matures what advise would ye give?


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## MichaelL (23 Nov 2004)

*Terms and conditions of SSIA*

I think it clearly states in the Terms and Conditions that you may not borrow to fund an SSIA.

Seems to be a grey area in this case though, as you are borrowing for a deposit, while continuing to pay into SSIA.

You can stop contributing after year one with no penalties that I am aware of.

You will have to pay DIRT whether or not SSIA reaches maturity


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## ClubMan (23 Nov 2004)

*Re: Terms and conditions of SSIA*

*Seems to be a grey area in this case though, as you are borrowing for a deposit, while continuing to pay into SSIA.*

While I'm no tax expert, I don't think that it's a grey area at all. If the _SSIA_ contributions are made from disposable income and one borrows for other purposes then one is not borrowing to fund the _SSIA_ and there is no breach of the relevant rules. 

*You can stop contributing after year one with no penalties that I am aware of.*

Yes.

*You will have to pay DIRT whether or not SSIA reaches maturity*

Yes - but the difference is that _SSIA_ savings maintained to maturity are subject to 23% tax on growth/interest only, while early encashments are subject to 23% tax on the lot. Note that the _SSIA_ early encashment/maturity taxes are not strictly _DIRT_.


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## 2004XYZ (24 Nov 2004)

*Re: Terms and conditions of SSIA*

Kerry, many thanks for your comments, much appreciated.

_Abuse deleted - I am not wasting my time trying to sort out if there is any substantial point being made_


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## rainyday (24 Nov 2004)

*Re: Terms and conditions of SSIA*

OK - So you are determined to shoot the messenger because you don't like what you hear. So be it.

Funnily enough, the person who is prepared to give you the hard message (regardless of how unpalatable it is) may well be a better friend to you than the person who gives you loads of huggy/kissy/feely encouragement and then watches you falling over the cliff.


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## Chord of Souls (24 Nov 2004)

*Re: Terms and conditions of SSIA*

Goodness me, someone seems to be taking this all very personally.  I’ve been accused of being disingenuous and dishonest, among other things.  I wish you’d just realise that in life some people are going to disagree with your views and some people are going to agree with them.  If every time someone disagrees with your points, you end up having a little rant and accusing them of dishonesty (etc.) like the one you’ve had above, I actually pity you.    

How much clearer do I have to be?  Lying to financial institutions is unethical.  Lying to individuals is unethical.  LYING IS UNETHICAL.  I’ve said it before but I’ll say it again.  It may be understandable, but it’s unethical.  If you feel like lying on your mortgage application, go right ahead.  I’m not even criticising you for it.  If I was personally under the same sort of pressures, I might even consider doing the same.  But if I did, I’d admit it was unethical.  I wouldn’t try to claim it wasn’t just because of who I had lied to, or how I felt about their ethics, or what the pressures were that forced me to do it.     

*I think we're perfectly entitled to ask what line of work you're in…*

Why?  It’s obviously news to you that some of us can hold and express opinions that aren’t necessarily influenced by how we choose to earn a living or our personal circumstances generally.  This is known as objectivity.

But seeing as you seem so hung up on what I do to earn a crust, I can tell you that I do NOT work for any financial institution.  I run and own a small business.  My business is of a financial nature.  In theory, I should have a vested interest in ensuring that more and more people take out bigger and bigger mortgages.  This does not colour my opinion about ethics.  

Now are you to apologise for calling me disingenuous and dishonest?


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## ClubMan (24 Nov 2004)

*Re: Terms and conditions of SSIA*

*I think we're perfectly entitled to ask what line of work you're in…*

Actually you're not.



> 16) Please respect the privacy of others:
> 
> Some contributors post anonymously/pseudonymously because they do not want to divulge their real identity for a variety of reasons. Please respect their right to privacy and desist from speculating on Askaboutmoney about their real identities. Posts which speculate about the identity of bona-fide contributors (as opposed to suspected spammers or other nuisance posters) who choose to post anonymously/pseudonymously will be removed.


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## 2004XYZ (26 Nov 2004)

*Re: Terms and conditions of SSIA*

Rubbish deleted


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## ClubMan (26 Nov 2004)

*Re: Terms and conditions of SSIA*

This topic seems to have run its course so I'm closing it now.


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