Question about mortgage and overdraft

glitter03

Hi all,

Any help on this question would be great thanks!

Me and my partner are in the middle of buying a property with the Homebuy Direct scheme. We just reserved our property and the mortgage application is going through.

My partner is a teacher and main source of income for us so the mortgage repayments would be coming out of his bank account.

I work part time but have two bank accounts, both with Natwest.

My 'main' account is where i have my wages paid into and all direct debits, shopping etc comes from here.

My other account is in its overdraft as it is the 'student' account i had at university. I make payments weekly into this account, albeit small ones.


My question is: will my overdraft affect our application?


Thankyou for any help

frankw5

In my experience the amount you pay for the student account would be taken out of your financial commitments and the amount outstanding could effect affordability.

What stage are you at with your mortgage?

glitter03

Hi, thanks for the reply!

Well the amount i pay into the student account is not a fixed rate or agreement between me and the bank. I just pay into it what i can so it can vary.

We have reserved our property and now are being put through for the mortgage and sending in copies of our passports/driving licenses/wage slips etc.

glitter03

anyone else any experience?

sharon1982

Hi there

The overdraft will be counted as debt as far as I know - it will show up on your credit report and could affect your affordability, just like a credit card would. However I guess it all depends on how much you have outstanding, as normally it is the ratio of debt that you are using that matters. Having said that, it depends on a whole range of things - speak to an IFA if you can.

For example, I paid off over £2k on my credit card just before I applied for my mortgage, but my credit report had not updated to reflect that. So when I applied it showed that I was using 61% of my credit, but because my credit rating was good and I hadn't missed any payments, it was all OK.