Can I get a mortgage if i've got a clean credit history but in my overdraft? 31 May 2012 at 2:15PM in Mortgages & endowments 9 replies 8.2K views

unluckylady_2

Hi all,

Just some advice please (my IFA is really slow at getting the job done!). I am trying to secure a mortgage for a property I have reserved. It is a new build property and I am purchasing it under the first-buy scheme (95% mortgage and 5% deposit). I have a clean credit history (999 score via experian) but I am in my overdraft and have been for some time (because I had to pay my family mortgage for unforseen circumstances, got ill and signed off work and to top it off was employed in a very underpaid job!). Is there a chance I can still get a mortgage? My overdraft is agreed and has all been declared.

My application was declined but I am appealing with the advice of my IFA but I wanted to know what my chances are of obtaining a mortgage?

harvey115

You are trying to get the strictest mortgage available in the market, criteria wise.

These mortgages are only available for squeaky clean credit history with good job and financially responsible people. However most of us are sensible with money but some situations makes us get into the difficult position.

A decline from a bank may not be overturned by an appeal, I have not seen anyone in recent month having achieved this in the forum. However it does not mean that people do no appeal at all.

I think the chances of getting a mortgage on this rate would be highly impossible, given the overdraft issue.

If you can get the overdraft to 0 again and are able to meet the requirements on the affordability calculator for the lender, you should be able to get your refusal overturned.

unluckylady_2

Hi, thanks for the reply.

So if I clear it for this month is that sufficient? My previous two bank statements would show I was in overdraft but would that be a problem?

Thanks:)

kingstreet

In most cases, you'll be asked for three months bank statements.

I guess you can see where I'm headed here...?

unluckylady_2

I understand. However, the only reason why I was in my overdraft was because my mum was going through her divorce (my dad was the sole wage earner and he had gone AWOL, so in his absence it meant I now had to pay all the bills and the mortgage as well as my own expenditure and top-up my own accounts as well as my parents'). I can clear my overdraft but this will be in a few weeks as I have had to use my overdraft to pay for all the fee's that are incurred whilst purchasing a house!

I'm really trying to make my own start in life and it seems unfair that i'm getting penalised because I was trying to keep up other peoples' motgage and bill payments! What is funny though is that I still managed all of this whilst being in my overdraft - so shouldn't that make me someone who is reliable?......

DVardysShadow

unluckylady wrote: »

I'm really trying to make my own start in life and it seems unfair that i'm getting penalised because I was trying to keep up other peoples' motgage and bill payments! What is funny though is that I still managed all of this whilst being in my overdraft - so shouldn't that make me someone who is reliable?......

Well, yes it does make you reliable. But for every reliable person dealing with problems, there are 2 with sob stories and excuses. The difficulty is telling them apart. Understandably, if you have bailed your family out and your financial position reflects this, a lender might think you will always need to bail them out. If this appeal and 1 more fresh application do not work, then I would suggest you keep saving and try again in a year's time.

HappyMJ

unluckylady wrote: »

I understand. However, the only reason why I was in my overdraft was because my mum was going through her divorce (my dad was the sole wage earner and he had gone AWOL, so in his absence it meant I now had to pay all the bills and the mortgage as well as my own expenditure and top-up my own accounts as well as my parents'). I can clear my overdraft but this will be in a few weeks as I have had to use my overdraft to pay for all the fee's that are incurred whilst purchasing a house!

I'm really trying to make my own start in life and it seems unfair that i'm getting penalised because I was trying to keep up other peoples' motgage and bill payments! What is funny though is that I still managed all of this whilst being in my overdraft - so shouldn't that make me someone who is reliable?......

You are not being penalized. You need savings to buy a house and being in an overdraft means you have zero savings. However, dipping a little bit into the overdraft at the end of the month may not always be bad as long as some savings are held elsewhere offsetting the overdraft usage. Same with credit cards. People can use credit cards as a cash management tool and be almost maxed out and still get mortgages as they also have the cash to pay the credit card bill off in full.

unluckylady_2

I have over £8k in savings (all for the deposit, fees etc) but I haven't been able to clear my overdraft until I got my new job. I was in an extremely underpaid position, which I had put across with all my bank statements for the appeal.

I could only clear my overdraft at the end of this month as it will be my first full month's pay. But I thought that the fact that I have savings to cover all the costs of the purchase and the first mortgage would be okay as my IFA said being in an agreed overdraft was fine! But it appears not! My IFA told me that having a credit card was a bad idea too, else I would have done a balance transfer??? I'm so confused!!!!!!!!!!!!!!

Any advice please?!:(

Joe_Bloggs

If your savings were reduced by the size of your overdraft would there have been an issue to stress over ?

Having a credit card and storing debt for the future is a coping mechanism that will bite back in the end.

J_B.

Thrugelmir

unluckylady wrote: »

I have over £8k in savings (all for the deposit, fees etc) but I haven't been able to clear my overdraft until I got my new job. I was in an extremely underpaid position, which I had put across with all my bank statements for the appeal.

I could only clear my overdraft at the end of this month as it will be my first full month's pay. But I thought that the fact that I have savings to cover all the costs of the purchase and the first mortgage would be okay as my IFA said being in an agreed overdraft was fine! But it appears not! My IFA told me that having a credit card was a bad idea too, else I would have done a balance transfer??? I'm so confused!!!!!!!!!!!!!!

Any advice please?!:(

Debt is debt . Savings are savings.

Where its kept makes no difference. As the figures are netted off.

So forget about your debts and savings being in separate pots. Its not how finance works.

Clear your debts. Get your personal budget in order, and rebuild your savings.