Pay off student OD with deposit savings?

coverjudged

Saving for a mortgage with my OH, currently have about 5000 in my ISA, but I know I am coming into some money in August.

Question is whether I should pay off my interest free student overdraft now with my savings, so that by the time I get the extra money to replace it will have been out of OD for couple of months, as not sure if this will make me a better mortgage prospect? Or if being in my OD will make me an automatic no no.

Any ideas from brokers? Does interest free debt make a difference or can lenders not see this?

[Deleted User]

From a financial point of view, it makes no sense to pay off an interest free loan/overdraft when you could have the money making interest in a savings account or ISA.

coverjudged

ringo_24601 wrote: »

From a financial point of view, it makes no sense to pay off an interest free loan/overdraft when you could have the money making interest in a savings account or ISA.

I understand the interest would be lost, but if being in my overdraft means that we will get rejected from a mortgage application, it WOULD make sense to pay it off. That's what I'm trying to ascertain. The mortgage is the goal right now, not the interest.

[Deleted User]

coverjudged wrote: »

I understand the interest would be lost, but if being in my overdraft means that we will get rejected from a mortgage application, it WOULD make sense to pay it off. That's what I'm trying to ascertain. The mortgage is the goal right now, not the interest.

Completely agree, a few quid in interest isn't enough to be worried about when it comes to getting a mortgage sorted.

Is that your only debt? Do you have a credit card? Are you on the electoral register?

I'd say those questions are more important than a few grand on an overdraft. However, before I moved house 18 months ago, I made sure to pay off all our credit cards using savings.

Idiophreak

I'm no expert, but I'd want to be able to send 3 months of bank statements off to an underwriter and not be seen to be relying on my overdraft...

coverjudged

ringo_24601 wrote: »

Completely agree, a few quid in interest isn't enough to be worried about when it comes to getting a mortgage sorted.

Is that your only debt? Do you have a credit card? Are you on the electoral register?

I'd say those questions are more important than a few grand on an overdraft. However, before I moved house 18 months ago, I made sure to pay off all our credit cards using savings.

I am on the electoral roll, yes. I have credit cards but they are all currently at 0% and I'm paying enough on them to make sure they'll be clear by the time the offers end. That debt will just be taken off our affordability though, yes?

From browsing the threads here it seemed that people were saying that any overdraft usage made you a bad prospect for the mortgage