Overdraft effecting my mortgage application - growing worried

TheAllanCadenhead

JimmyTheWig wrote: »

I think it will depend on many other factors, e.g. loan to value, salary multiples, the rest of your credit record, your girlfriend's credit record, time in current job, etc.
Living in your overdraft shouldn't be a deal-breaker.
But if due to everything else your application is borderline then it might be this that pushes it over the edge into the "no" pile.

The mortgage loan is for £27k (pushing for it to be reduced based on the valuation of the property was lower than what the sellers are selling for). This is for 25% of the property valued at £120k (valued at £110k which is what we are trying to buy for).

My salary is £14k salary, my girlfriend is a teacher whose salary is £23k.

I have never default on any agreement, always paid on time, always kept within my limit, paid monthly for 3 years or more. Only downside is i'm living within my means but inside my OD limit. Girlfriend not in her overdraft but then had to enter it to support her teacher training for a year. She has now fully paid this off and at payday will not be going into it. And her score is immaculate with a phone bill for her creditors to rate her credit on.

What do you reckon @JimmyTheWig ??? I know you can't advise but just an opinion would do

TheAllanCadenhead

R_P_W wrote: »

Well if God is going to help you pay your mortgage and overdraft you have nothing to worry about!

Took the words right out of my girlfriends mouth. She would praise you for saying that.

sammyjammy

TheAllanCadenhead wrote: »

Thanks Sammy! My fiance is going to seriously kick my behind if this mortgage doesn't go through!

I always think if people say they have been rejected for having a £200 OD in the last year... what hope have I got if I've been in my £2k OD for 3 years!!

The £199 is the lenders fee. Because Leeds haven't "Lent" me any monies surely the can't keep this? If it was a processing fee then fair enough.

If anyone has a mortgage with Leeds Building Society if they come across this, please comment.

:mad:

If you've already paid the fee I don't think you get it back, if you look at their website it says "Booking Fee: £199 (Payable on application - non-refundable)" no harm in trying though.

Thing is you could be worrying about nothing although I understand where your coming from. Different lenders do different things, the lender I have now gone with doesn't even ask for bank statements so won't even know about my overdraft. The reasons stated for me were non essential spending in overdraft so I am thinking if it was just shopping/petrol they may have been ok, maybe it was an excuse for something else. Mine was also a single application which makes a world of difference as the risk isn't spread.

I'm sure you'll be fine, try and stop worrying about something that hasn't even happened yet. Can't remember if you said you were using a broker but if you are get them to explain that you are paying it back and it'll be gone for good by xx/xx/12.

TheAllanCadenhead

sammyjammy wrote: »

If you've already paid the fee I don't think you get it back, if you look at their website it says "Booking Fee: £199 (Payable on application - non-refundable)" no harm in trying though.

Damn it. What a rip off. Should be called a "processing fee" then, not a lenders fee. If they do refuse it the only thing they've lent me is a whole load of stress. And no, I'm not going to give this back to them and they can charge all the interest on this stress they like! haha!

sammyjammy wrote: »

I'm sure you'll be fine, try and stop worrying about something that hasn't even happened yet. Can't remember if you said you were using a broker but if you are get them to explain that you are paying it back and it'll be gone for good by xx/xx/12.

I'm trying to take this attitude. I'll keep you informed of how it goes. Might take a week or two though.

Thanks for the support and great help. This forum needs more people like you!

JimmyTheWig

TheAllanCadenhead wrote: »

The mortgage loan is for £27k (pushing for it to be reduced based on the valuation of the property was lower than what the sellers are selling for). This is for 25% of the property valued at £120k (valued at £110k which is what we are trying to buy for).

My salary is £14k salary, my girlfriend is a teacher whose salary is £23k.

...

What do you reckon @JimmyTheWig ??? I know you can't advise but just an opinion would do

I'd say on these figures you are perfectly fine for the loan. Such a small salary multiple shouldn't be a question.
The Loan to Value will be an issue, though, if you can't get the purchase price down.
If the purchase price stays at £120k and the valuation stays at £110k you will need to find another £2,250 deposit to bring the mortgage down to 90% LTV.

[Incidentally, have you gone for a mortgage with low fees, or have you gone for one with the lowest interest rate you could find?]

JimmyTheWig

sammyjammy wrote: »

Different lenders do different things, the lender I have now gone with doesn't even ask for bank statements so won't even know about my overdraft.

It will show up on your credit file, whether they ask for bank statements or not.

TheAllanCadenhead

JimmyTheWig wrote: »

I'd say on these figures you are perfectly fine for the loan. Such a small salary multiple shouldn't be a question.
The Loan to Value will be an issue, though, if you can't get the purchase price down.
If the purchase price stays at £120k and the valuation stays at £110k you will need to find another £2,250 deposit to bring the mortgage down to 90% LTV.

[Incidentally, have you gone for a mortgage with low fees, or have you gone for one with the lowest interest rate you could find?]

Ok. The property is on a shared ownership scheme. The sellers are selling it at £120k. It's valued at £110k. We are buying 25% of the property, the other 75% belongs to the government. Therefore, our mortgage will be £27k, and the £3k we already have (and have proof of) for a deposit.

If we are able to bring down the selling price to the valuation cost this can potentially knock down our total mortage from £27k-£24k.

The mortgage rate we went for is a 25year fixed rate for 2 years @ 5.9% but then after the 2 years comes down to 5.3% or something like that. The lenders fee was only £199 which was ideal for us.

Just to summarise, this is a mortgage for 25% of the property which totals (at the moment) £30k, 10% deposit and the rest is mortgage.

The bigger picture is that it's me AND my girlfriend going for this mortgage, she is a teacher and I work in the private sector. I just feel it's me bringing her down with my overdraft.

Worse case scenario is that we pull out, lose the £199 fee?? I take it the solicitors and Mortgage Matters (the people who are liasing with the solicitors, the mortgage advisor, the sellers and Leeds BS) will keep hold of the £300 I also paid them for sorting everything out, until we find another mortgage provider who will accept? -if Leeds BS dont?

Sorry, I should really be speaking to them, not ranting on here, but getting info on here is so much easier then calling them.

sammyjammy

JimmyTheWig wrote: »

It will show up on your credit file, whether they ask for bank statements or not.

Mine doesn't. On Equifax it just says that there is a £500 credit limit on it (the overdraft) doesn't say its ever been used or how or when just has a long line of greens and says £0 against the record. Maybe they record it on the 1st of the month or something when its not in overdraft!

JimmyTheWig

TheAllanCadenhead wrote: »

Ok. The property is on a shared ownership scheme. The sellers are selling it at £120k. It's valued at £110k. We are buying 25% of the property, the other 75% belongs to the government. Therefore, our mortgage will be £27k, and the £3k we already have (and have proof of) for a deposit.

If we are able to bring down the selling price to the valuation cost this can potentially knock down our total mortage from £27k-£24k.

You may have mis-understood how LTV works.
This is, potentially, a much bigger issue than your overdraft.

Forget about the shared ownership. Lets just look at the bit that you are buying.
You are buying something for £30,000 (25% of £120k).
So in theory the building society will lend you £27,000 (90% of £30,000). So you would need to put in £3,000, which you have.
But the value of what you are buying is £27,500 (25% of £110k).
So in reality the building society will only lend you £24,750 (90% of £27,500).
But if you are still buying it for £30,000 then you will need to put in £5,250. Of which you only have £3,000. So you are £2,250 short.

The building society will use their valuation to calculate loan-to-value rather than the purchase price, if their valuation comes in lower.

I'm assuming that you are going for a 90% loan-to-value (LTV) mortgage. 95% mortgages do exist, which would help your situation, but they are not easy to get these days.

The mortgage rate we went for is a 25year fixed rate for 2 years @ 5.9% but then after the 2 years comes down to 5.3% or something like that. The lenders fee was only £199 which was ideal for us.

Sounds like a good deal for you. The rate is reasonably high, but the important thing for you is that the fees are low.
My point was that for some people with a large mortgage balance it is worth paying huge fees to get a low interest rate. But with your low mortgage balance it is more important to keep the fees low, which you have.

JimmyTheWig

sammyjammy wrote: »

Mine doesn't. On Equifax it just says that there is a £500 credit limit on it (the overdraft) doesn't say its ever been used or how or when just has a long line of greens and says £0 against the record. Maybe they record it on the 1st of the month or something when its not in overdraft!

Correct, this will be a snapshot at the same time each month. It appears that they have chosen a date in the month where you are not overdrawn.
In the OP's case I don't think this ever happens, so their overdraft would always show on their credit report. Though again if it was snapshot just after payday then it wouldn't appear as bad as it really is.