How much will an overdraft affect the chances of a mortgage offer?

s_glover

Hi,

My OH and I are FTBs looking to get a 5 year fixed mortgage from HSBC with LTV 85%. We visited the bank last week and have received an AIP for £187K based on a property of £220K. At the time we submitted details of salary, credit card debts etcs.

We have an appointment next week again at HSBC to actually apply for the mortage, however I am a little concerned we may be turned down based on the fact both me and OH have been well into our overdrafts for the last 3 months. We wern't asked any details about overdrafts when the AIP was made so this was not taken into consideration. I am wondering how likely this is to affect our chances of a successful application?

Any help would be apprciated.

TIA

MacMickster

The problem is that you haven't really got a 15% deposit, have you? The overdraft has effectively subsidised your deposit.

If I were you I would pay off your overdrafts and try applying for a 90% LTV mortgage.

Thrugelmir

On your combined salaries the question will be why the need to use overdrafts? Was it temporary. Or does it reflect the fact that you don't manage your money very well. How much credit card debt do you have between you?

s_glover

Yes we do have 15% deposit as we have the deposit in savings and have more than enough to cover 15% of £220K

We have used overdrafts because these have been interest free as opposed to credit cards or using savings. We have a small amount of credit card debt (which could be paid off with savings but it is currently 0% interest), but I this has already been taken into accoutn when the AIP was made.