Moving mortgage but bank account overdrawn UPDATE HELP PLS

carrot_cake

Hi
I know I probably won't get a definite answer to this but would welcome people's thoughts (or experiences if anyone has had any similar) on this situation. We are currently in the process of moving (hopefully) and all we are asking our lender to do is move our mortgage from one property to another (not asking to borrow any more). We have never missed a mortgage payment and have also made regular overpayments. However, we have been asked to provide all documentation etc and I am worried because my account is permanently in my overdraft. I have never exceeded my overdraft and can clear it before providing statements (we have been putting money aside for the move) but obviously they are asking for last 3 months. The mortgage payments do not come out of this account and, as I said, have always been up to date. I'm really concerned now that they will not agree to our mortgage because of this :-(

EDIT: pls see post 18

kingstreet

First, you cannot transfer a mortgage from one property to another. On completion day, your old mortgage ends and a new one starts on the new property. You may be moving the old rate from the old mortgage to the new one, but that's as far as it goes.

You are therefore applying for a new mortgage, so you go through all the status checks any other applicant goes through. Your income and credit history will be checked.

Lenders look at bank statements to see if there are any "unpaids" or unauthorised borrowing charges. Use of a small agreed overdraft is perfectly normal and unless you have other issues in your financial make-up you haven't mentioned, this should not be a problem.

It would be helpful if you confirmed the lender's name and the multiple of income you need and the loan to value.

Thrugelmir

carrot_cake wrote: »

I have never exceeded my overdraft and can clear it before providing statements (we have been putting money aside for the move)

Your overdraft usage will be recorded monthly on your credit report. So the entire history will be visible.

Is the overdraft interest free?

carrot_cake

Hi
Thank you for the replies. With regards to my account/overdraft, I pay an account fee every month of £12 which entitles me to he overdraft and various other benefits (which I never use). The bank also take an amount (which I think is interest but never exceeds about £6) every month.

In regards to the mortgage, the lender is Nationwide and technically, on paper, we cannot afford the mortgage. (My husband is self-employed and the work doesn't pay as much as it did 10 years ago with everyone competing for the jobs). Our existing mortgage was taken out 10 years ago. However, we are now putting down a sizeable deposit (equity from our house sale) so although we are asking to borrow £155,000 (which is the same amount we have now), the property we are buying is worth £290,000. Also as stated in the original post, we have never defaulted on any mortgage payments. I'm just really concerned that the overdraft on my account will stop us proceeding :(

kingstreet

carrot_cake wrote: »

technically, on paper, we cannot afford the mortgage

This is a concern. Have you used Nationwide's affordability calculator to establish what you can borrow?

http://www.nationwide-intermediary.co.uk/calculators/aff_calc

If not, you should do so. I'm not sure how much discretion they have these days if the mortgage does not appear affordable using the lender's own formula.

carrot_cake

Thank you, I will try that. When I say on paper, we can't afford it, I mean our joint earnings do not add up to enough but, without going into detail, I am receiving carer's allowance/disability allowance for one of our children which we have been advised would be taken into account.

monty-doggy

Why do you want to move do you need a bigger house?

carrot_cake

We are moving because our disabled child needs specialist education facilities, the nearest of which are too far to travel every day & also the property we have found would be much more suitable. This is the reason I'm so worried it will not be agreed :sad:

monty-doggy

If that the case can't you get doctors and specialist reports plus details of your extra benefits to the underwriters?

carrot_cake

They already have details of the benefits received but are waiting for my bank statements before they will process a formal application, which is what I thought would be of most concern (the fact that I use the overdraft constantly). I do have reports from specialists regarding my child's disabilities & the need for specialist input but didn't think these would be taken into consideration?

monty-doggy

Have you rung the provider and asked to speak to the underwriting dept? The reason I say have them handy is because when they look at your benefits, they may question why dla and carers allowance is being spent on a mortgage. If you can prove its in your child interests they may relent. I'm told that an underwriter does review mortgages before approval, so is worth a try?