FTB Overdraft Query

Tedburgundy

Hi all i know this is probably a tedious question regarding an overdraft. My partner and i are in the process of buying our first home and i have an agreed overdraft of £1200 which i use to the fullest amount. I have significantly reduced this from £3000 over the past 6 months. When i get paid my account is back in the black and i ring up my bank and reduce the overdraft every month to show i am cutting out my lending, for example on Friday i will ring up and reduce it by £400. Basically i am just worried that this might become an issue when i apply for the mortgage and submit my bank statements.

pjread

Well, what do you want to know? Living in an overdraft isn't usually seen positively, if that's the question.

gazter

My two banks (hsbc & santander) make no reference on my credit file for me being overdrawn. I have a joint and current account with hsbc, both of them i dip in and out of the overdraft, i tend not to have for a long period of time, just a cashflow issue. My santander one comes in and out of a small overdraft.

I checked experian, noddle and equifax. None of them made reference to me being in an overdraft or what the figure was.

jamesd

Don't reduce the overdraft facility. It's useful protection against direct debits not being paid and it reduces the percentage of your unsecured credit facilities that is used if you keep it higher while reducing the amount borrowed.

It's regular use of the overdraft facility for borrowing that is a more negative sign, not merely having a facility available to use. Otherwise it's just available credit and doesn't matter much so long as it's not hugely excessive compared to your income.

Credit reports may well not show an overdraft balance that is within the agreed overdraft limit. However, a mortgage lender is quite likely to ask for past bank statements and those will show the usage.

With rapidly reducing use of the overdraft facility you're showing that you have excess income and that is quite likely to do more to help you than hurt you at this point.

Tedburgundy

Thank you for the responses. I wanted to completely clear this issue before I even thought of applying for a mortgage but the right house has come along and we've had a bid accepted. I will discuss this with my broker and hopefully it won't be an issue. It does show on my credit reports that I have reduced the agreed limit every month.

sleepyheadalk3

We have just had our mortgage accepted by Nationwide and my partner is almost always in his arranged overdraft over £1200. Obviously depending on the date it would be higher or lower but this showed up on his credit report (Halifax account) so although they never requested bank statements it would have shown at credit check

Tedburgundy

My broker has just put are initial application in tonight and we have an AIP. He has asked for my last 3 months of bank statements which will obviously show me overdrawn. I think i will simply try and pay the thing off in full and make sure to include that statement at the front!!! Fingers crossed!