Will using my overdrafy affect my mortgage application?

HR1_2

Hi,

My partner and I are making a mortgage application. We have a good deposit and can easily afford the monthly payments. However, I have an overdraft and use it quite heavily (virtually every month) even though I am putting money into a savings account each month. The lenders have requested bank statements and I am worried they are going to refuse the application based on the management of my accounts. Can anyone advise if they have been accepted whilst still using an overdraft facility?

Thrugelmir

You are not saving money if you are running an overdraft.

Only save what you can genuinely afford.

By looking at your bank statements a lender will see you are not in control of your personal finances.

HR1_2

I apprecaite this, and I agree it's not ideal. However, the question still remains unanswered - can a mortgage application be rejected because I have used my agreed overdraft facility each month?

Thrugelmir

HR1 wrote: »

I apprecaite this, and I agree it's not ideal. However, the question still remains unanswered - can a mortgage application be rejected because I have used my agreed overdraft facility each month?

Yes they can and do reject mortgage applications. Ideal isn't the word I would use.

In your opening post you said you can easily afford the mortgage repayments but you use your overdraft heavily. Doesn't stack up.

HR1_2

Okay, thanks for your view. I have to say that I'm glad you won't be considering the application!

mikey_D

I use my overdraft everymonth and haven't had any issues getting mortgages for the past 8 years, mine is not thorught financial misplanning, it due to the amount of expenses that I rack up with work which take 4-6 weeks to hot my account, however no mortgage advisor has ever questioned or rejected me on it.

I would think if you had loads of debts on CC's and were constantly in your overdraft then it would be a no no, but if you have an overdraft and it no CC's then I don't think it will affect you.

BoGoF

The fact is their is a possibility it could be rejected on this basis. I suppose it comes down to how much of an o/d are we talking?

You also said you saved every month, are these savings your deposit. If so, it could be construed that the only reason you have been able to save is by using an overdraft, in effect borrowing money.

HR1_2

Thanks, that makes me feel a little better!

I have never owned a credit card & so I am hoping that they will see that each month I have cleared funds (at some point or other!) and two savings accounts.

Thanks again.

BoGoF

mikey_D wrote: »

I use my overdraft everymonth and haven't had any issues getting mortgages for the past 8 years, mine is not thorught financial misplanning, it due to the amount of expenses that I rack up with work which take 4-6 weeks to hot my account, however no mortgage advisor has ever questioned or rejected me on it.

I would think if you had loads of debts on CC's and were constantly in your overdraft then it would be a no no, but if you have an overdraft and it no CC's then I don't think it will affect you.

Were any of these applications recent ?

HR1_2

Guess I'll just have to wait and see!

Thrugelmir

HR1 wrote: »

Okay, thanks for your view. I have to say that I'm glad you won't be considering the application!

You are asking "somebody" to lend you thousands of pounds. So you need to convince them that you are a suitable applicant. Thats all I trying to get across to you. Lenders can pick and choose who they want to advance money to. So if in doubt often or not they say no.

Keep your finances more straightforward. Pay off your overdraft from your savings. Then keep your current account in credit. Its a good disclipline.