1st time mortgage - refusal for having 2 banks

manny1481

I have 2 bank accounts, one which i have used as a (spare account) transferring money to save. But due to money problems (car mainly) the account has been in the red for a long time, (never going over overdraft limits) - this bank account is now in the black but surely this past shows up on my credit score. Would you advise I close this account, as I no longer use it or does it not matter. Deposit will be given to me as a gift from parents - Is it advisable to have this transferred to my bank before I apply for a mortgage? will I still need to tell them it has been a gift?

Thrugelmir

Constant overdraft usage does not reflect well on your management of personal finances. Whether an account is open or not will not affect your mortgage application.

Your solicitor will ask for the source of the deposit. For tax reasons it is best if this is fully documented. As the gifted deposit will be subject to IHT for up to 7 years on the estate of your parents.

Your solicitor will advise the lender. Providing it is an outright gift rather than a loan then it shouldn't be an issue.

manny1481

thanks for the response, I agree managing my finances over the past few years hasn't been easy due to having loans, credit cards and a low wage whilst paying rent. I am a lot more stable now having no outstanding debt and a 5k pay rise. Having the help from my parents means I can get a mortage now rather than saving for 2-3yrs.
Do you think my chances will be bleak with having no history of saving money, I've never had huge debts mind. I have 10-15% deposit and will need 100k mortgage (joint income is 40k)

manny1481

manny1481 wrote: »

thanks for the response, I agree managing my finances over the past few years hasn't been easy due to having loans, credit cards and a low wage whilst paying rent. I am a lot more stable now having no outstanding debt and a 5k pay rise. Having the help from my parents means I can get a mortage now rather than saving for 2-3yrs.
Do you think my chances will be bleak with having no history of saving money, I've never had huge debts mind. I have 10-15% deposit and will need 100k mortgage (joint income is 40k)

Forgot to mention: Money from parents is a gift (not a loan)
I have been offered a 0% free loan (for 3-4yrs) from my boss at work to help me out if i need it (upto 8k) - is this advisable to have a bigger deposit or will this look bad on an application?

Thrugelmir

manny1481 wrote: »

Do you think my chances will be bleak with having no history of saving money, I've never had huge debts mind. I have 10-15% deposit and will need 100k mortgage (joint income is 40k)

The issue for lenders is affordability. Which isn't an issue on the amount you wish to borrow and your joint incomes.

Borrowing 90% will restrict your mortgage options and result in you paying a fairly high rate of interest.

Here's a link to the FSA website. It'll give you an idea of the lenders in the market and what's available to you. The advice is totally unbiased.

http://tables.moneymadeclear.org.uk/Comparison-tables-home/Mortgages/Compare-mortgages/