Mortgage chances if previously overdrawn but now debt free with 20% deposit

DT_HOPPER

Hello,

I am in the process of applying for my first mortgage. This is with the Halifax and was agreed in principle in January 2013 but I have since had to wait until this month to submit so that I had two years freelance accounts. Our mortgage advisor still seems to think that it is all good to go ahead and will be submitting it for us tomorrow. However following a conversation with a friend last night I am now slightly concerned and seeking advice from anyone who has experience or knowledge of situations like the following.

Myself and my partner are totally debt free, we have paid all our loans off and also paid off our overdrafts. We have a good combined yearly salary and also have in the region of a 20% deposit. My concern stems from the fact that until I very recently paid all of my debt off I have been living in my overdraft since leaving University 8 years ago and in the past 12 month's went over my overdraft limit 4 times. My Experian credit score is currently 858. My partner has excellent credit 999 and has hardly used her overdraft in the last two years.

My worries have come about because a friend told me that he was denied a mortgage because of a similar overdraft history to mine. Is there a chance that our application will now fail even though our mortgage advisor said Halifax agreed it in theory in January and then also agreed it in theory 3 weeks ago when my partners salary increased.

Any feedback appreciated

ndf9876

For what it's worth, my wife and I were in a fairly similar position to you; I still got a mortgage offer.

I don't know whether the Halifax DIP is a soft search or a full credit check; assuming it's the latter then you should have no problems proceeding to full application at which point they'll be looking for you to prove your income etc. It also, I think, comes down to things like income multiple you're looking for (in my case we were only looking for 2.8x our joint income).

Lots of people have different tales to tell about mortgages, we too were "scare-mongered" by stories of hour-long grillings over bank statement entries (where did you spend this, where did you spend that etc).

Is there a chance your full application will fail - yes, I think in most cases there is a "chance". Is it realistic? Your broker will be the best person to advise; presumably he knew your full financial history and will have used his skill and judgement to match you with the most suitable lender. From my (non-Halifax) experience, our broker told us that once the hard credit search was done, in our case at DIP, the underwriting was just a case of proving income and identity. Well, not "just", but you get the idea

phildamb

DT_HOPPER wrote: »

Hello,

I am in the process of applying for my first mortgage. This is with the Halifax and was agreed in principle in January 2013 but I have since had to wait until this month to submit so that I had two years freelance accounts. Our mortgage advisor still seems to think that it is all good to go ahead and will be submitting it for us tomorrow. However following a conversation with a friend last night I am now slightly concerned and seeking advice from anyone who has experience or knowledge of situations like the following.

Myself and my partner are totally debt free, we have paid all our loans off and also paid off our overdrafts. We have a good combined yearly salary and also have in the region of a 20% deposit. My concern stems from the fact that until I very recently paid all of my debt off I have been living in my overdraft since leaving University 8 years ago and in the past 12 month's went over my overdraft limit 4 times. My Experian credit score is currently 858. My partner has excellent credit 999 and has hardly used her overdraft in the last two years.

My worries have come about because a friend told me that he was denied a mortgage because of a similar overdraft history to mine. Is there a chance that our application will now fail even though our mortgage advisor said Halifax agreed it in theory in January and then also agreed it in theory 3 weeks ago when my partners salary increased.

Any feedback appreciated

I would say a 20% deposit gives you a very strong chance of a mortgage because overall its a lower risk for them plus being debt free means less creditors in line should you have any problems. I would be surprised if they did refuse you. They may put other conditions in but unlikely. 20% deposit is rare at the moment.

lee111s

My lender only wanted to see that I didn't use more than £200 of an overdraft in the last 3 months. The fact you have a 20% deposit will put you in a good position and I wouldn't worry about it too much. Most lenders from what I see on here will only ask for 3 months worth of bank statements.

Building_Surveyor

i do not have a formal overdraft - never have, however did have an unauthorized overdraft of about £5.00 twice in 2 months which led to charges from my bank of £25 each time (extortionate), the unauthorized overdraft was only for a day or so, this was purely down to me not transferring money between my accounts - this would have been visible to my lender on bank statements but it wasn't raised as an issue and the mortgage went through fine. My LTV was 85%