About to come out of debt I hope (apart from mortgage!) - a question

maurice28

Hope someone can offer some advice and this is an OK place to post, seeing as hopefully I have just come out of the debt I was in (albeit on the cusp of taking out a mortgage!) This is a bit long so thank you in advance for reading!

I am looking to buy a house with my partner. We have put in an offer on a house for £118,000 and had it accepted. We have a 15% deposit made up of savings and gifts from parents. We are first time buyers and have been living at home with parents.

However, I’ve been bad with money in the past, and was made redundant a couple of years ago (but have been in constant employment again since then). As a result, for probably the last 18 months or so I have been living in my overdraft. This had a £1000 limit, and I always remained within this limit. I would use it to its maximum, then get paid £1320 a month, so be about £320 in credit, then use most of this wage over the month and the cycle would continue.

As well as this, I had an £800 overdraft in an old student account (with a £1000 limit). This overdraft has remained fairly static, but always within limits.

My outgoings were rent to my parents, general spending and occasional payments from my current account to the overdraft in my student account. Stupidly, I have also been putting £500 a month into a savings account towards deposit, rather than using this to clear overdrafts.

My partner didn’t know all this, but I have confessed to her and everything is OK now. I used money that I was putting aside in savings to clear both the overdrafts, so I am now at zero. When I am paid in a week, I will be £1320 in credit with no overdrafts to pay.

So, we are in the process of buying a house. We have had a mortgage quote and using our combined salary have satisfied the bank we could afford the mortgage and bill payments. I know when we apply they will ask to see three months bank statements. As I said, these will show that for the past 2 and a half months, I have been living in my overdraft. They will also show this is now cleared and I am back in credit (or about to be when my wage goes in anyway).

My question is, will this lead to the bank to reject the application? I have been living in my overdraft, but always within authorised limits and have now paid it off and am out of it. On the other hand, does it show a lack of care they will not want to get involved in?

My Experian credit score is 999, and all accounts on there are marked as ‘Satisfactory’. The one potential blip is a late payment 13 months ago on a credit card. This is now fully paid off and has been so (and unused) for about 4 months. Is this likely to have much impact?

Hopefully someone can advise. I’ve been stupid in the past but ready to start again now. How do my chances sound?

maurice28

Oh, and please tell me if this is unsuitable for this forum. I got a bit of information in the Mortgage forum but wanted to try here too, I heard it is supportive!

ithomso1

Hi Maurice,

Very Simliar situation to yourself here!

With regards to a mortage you should be absolutley fine pending you _Tell_ them about the late payment.

I had a mortgage application with YBS and they said as long as we mentioned the late payments everything was fine.
I was also in a very similar situatoin with an over draft! (Living out of £1750.

To put the wages in comparision
Mine -
£20600 before Tax
OH
£16000 before tax

Mortgage accepted for £82,500 to problem