Getting a mortgage with overdraft & credit card

missymossy

Hi there,

First time buyer with some queries. Basically my boyfriend and I are wanting to buy a house and are just going through the mortgage application. He is a saint with his current account, credit card and savings. I however am not. I have a credit card that had a limit of £5,000 but I'm only using £1,680 and I also have an overdraft of £800 on my current account, I'm always in my overdraft each month and often near to the max. This overdraft is agreed with my bank and they have even asked if I'd liked to extend which I declined. I went over without realising last month and have an informal fee to pay of £25.00 but thats me not realising. Sods law. I also have a directory card which I missed two minimum payments in a row on (I totally forgot) but I just paid the entire lot off, so there is nothing on it now.... but again sods law.
First question - will my terrible banking hold against us our mortgage application? Secondly will me going over by mistake going to effect me? Thirdly can I do anything about it all? I'm absolutely petrified I'm going to cause us to be declined.

Any help or advice would be wonderful.

From Scared & Nail Bitingly Nervous.
xxx

ACG

Whats the purchase price and deposit amount and also your incomes?

Thrugelmir

missymossy wrote: »

Thirdly can I do anything about it all? I'm absolutely petrified I'm going to cause us to be declined.

A lender is going to weigh up whether they believe you have the ability to manage your money properly. As with a mortgage missed or late payments just aren't an option. So you need to sit down with your partner and organise your finances between you in what ever way works best. This includes you living within the money you have, i.e. start reducing the overdraft.

ValHaller

Keep your bank account clean and in the black. An overdraft can bite you if it is withdrawn - which it can be - without notice. If that happens, you will gain 'Arrangement to Pay' markers or even a Default.

missymossy

£155,000, and deposit of £23,000. On 18,500 & 20,000.

Ideally I want to arrange with my bank to reduce my overdraft by £100 a month that way I can pay it off much more easily.

The overdraft has been formally arranged though and has been for years... Does that make a difference?

ValHaller

Did you put in any of the deposit? Because if you did, you might as well use £800 to clear the overdraft in one hit and be done with it. Otherwise, if none of the deposit is yours, you might as well put some of your spending to the credit card and reduce the overdraft that way. What matters is clearing the overdraft borrowing. The overdraft limit is irrelevant.

Although the overdraft may be formally arranged, unless the arrangement states differently, it can be withdrawn without notice.

kazza85_2

To share my experience..I secured a 95% LTV mortgage with my partner... I had a couple of hundred pound overdraft and around £1k on a credit card and my partner had about £1.8k overdraft.

So it's not totally out the question.

missymossy

It's money that has been left to me, without it we wouldn't be able to buy the property. I have taken the advice and am making steps to reduce both. Hopefully by doing so it will get me completely clear. I have bonus coming in next month so I can pretty much pay the entire overdraft off, just a shame I couldn't do it before hand!

StrawberryTwist

Hi MissyMossy,

I understand it is not the same for everyone and all the other variables involved etc but we too used our overdraft and I am embarrassed to say that it was mainly through not keeping an eye on everything properly, like you I was really worried about it and would spend hours reading on here, the general consensus was that I was doomed lol!

But it was ok! It was not the bullet that I thought it was going to be! We pick up the keys to our house next week Of course I am NO expert but I really don't think an overdraft will be a deciding factor against you.

I will say though, I have since (especially through waiting for exchange etc) not gone near the overdraft! Its there now for what it is meant to be there for, emergencies. I have discovered that this house buying lark is expensive lol with lots of little niggly costs involved as well as the known obvious ones so it is best to be all squared/tidy financially.

Good luck!!

kingstreet

Working within a small agreed overdraft is usually not a problem.

However, exceeding the limit and incurring "unauthorised borrowing" charges will be. NatWest for example would decline immediately any application with such an issue visible.

Current account conduct is normally more of an issue for the clearing banks than it is for the building societies and ex-building societies.

Two late payments and an unauthorised borrowing incident are going to make life difficult for you with some lenders. Don't do anything else to reduce further your potential lender pool.