I’m in £70,000 debt — my wife can never know how I plan to pay it off

A large home and a six-figure salary can make someone look financially bulletproof – but property wealth does not necessarily mean spare cash.

This week’s Money Problem reader Gerry is 64, earns over £100,000 a year and lives in a £3 million five-bedroom house in beautiful Berkshire.

Yet he’s in panic about a £70,000 debt he owes his dad and the fact he’s hidden it from his wife.

Wondering whether a taking a further advance on his mortgage could make his problems disappear, he asked Metro consumer champion Sarah Davidson for her views on the matter.

The question…

I earn £110,000 a year and my wife and I live in a house worth around £3 million.

To outsiders, we look very comfortable. We have good jobs, holidays and two children at private school, although there is still a mortgage on the house.

Two years ago I made a private investment without telling my wife. It went badly wrong.

I borrowed £70,000 from my dad, convinced I could repay it from my annual bonus. Then my bonus was smaller than expected and he now needs the money back to move house.

My wife has no idea I owe him anything. I have kept up every mortgage and credit-card payment but constantly move money around before she sees statements.

There is plenty of equity in the house and I think the only obvious option seems to be remortgaging and borrowing more.

Could I borrow slightly more than the £70,000 and tell my wife it is for home improvements rather than admit what happened?

The answer…

Oh Gerry. What a mess you’ve got yourself into.

I’m afraid I have absolutely no sympathy for you. You’ve lied to your wife from the off. You’ve put your dad in a really difficult position. And now you’re thinking about committing mortgage fraud?

Err. No.

You are proposing to turn a personal debt to your dad into a joint debt with your unwitting wife secured against a jointly owned family home.

That affects her equity, her mortgage commitments and, if the mortgage is a joint one, her future financial credibility is on the line too.

Even if the mortgage were solely in your name, taking more debt against the home without an honest conversation with her would be morally, pretty low.

It’s also illegal.

Never tell a mortgage lender the money is for home improvements if it is to repay a debt.

The Financial Conduct Authority requires lenders to assess whether a varied mortgage contract is affordable, considering net income, committed expenditure and ordinary household costs.

You should always give accurate answers about borrowing, outgoings and existing commitments.

That said, before you make any more inadvisable financial decisions you will almost certainly come to regret – just take a breath.

You need to be logical, not emotional.

Download the last 12 months of statements for every account, card, loan, investment and mortgage you have.

Write down the amount owed to your dad, any interest, his repayment deadline and the original terms. Include in this accounting every direct debit, school fee and regular cost commitment you have.

Then get confidential, free debt advice from StepChange or through MoneyHelper’s debt advice locator.

This is not only for people facing bailiffs. They will help you set out the facts, examine whether unsecured borrowing is an option and build a realistic repayment plan.

Next, choose a time when the children are not around and ‘fess up to your wife.

Start with the truth: ‘I made an investment without telling you. It failed. I borrowed £70,000 from my dad. I have taken debt advice and I want us to look at the full picture together.’

Take the paperwork, state the amount without minimising it and explain what you have done to stop it worsening.

Your wife may be angry — I would be furious — but relationships aren’t always plain sailing, and honesty and integrity is what’s most likely to get you both through this.

It may be that remortgaging is the right thing to do, but doing so behind your wife’s back and by lying to your lender is definitely not the way to go about it.

And yes, Gerry, you do need to have both of these conversations — now.

Stop moving money around, gather the evidence, get independent debt advice and tell your wife. It’s time to face the music.

Do you have a story you’d like to share? Get in touch by emailing MetroLifestyleTeam@metro.co.uk

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