Mortgages - payday loans and overdrafts

wonderer123

Hello,

Currently about to apply for my first mortgage for a new build property I've seen. I am however getting increasingly worried about whether my mortgage application would be accepted...

On the plus side I have a £40K deposit (the property is for sale at £195K), my outgoings are minimal and my salary is circa £30K. I have no dependants, no loans and no credit cards. And no missed payments or CCJs etc. I have infact had a couple of loans for around £3K each and paid them off no probs. I'm confident that financial credit scoring would be fine.

On the downside, my overdraft is £5K (and maxed out by the end of each month) and I have used payday loans to fund my excessive (partying!) lifestyle for far too long. Probably the last 2 years.

Obviously whoever I apply to will check my last 3 months of statements and now I'm worried that I'll get rejected on the grounds of my large overdraft and my heavy use of payday loans! Any thoughts / ideas? Unfortunately I cant hold of for a few months as others are interested in the property.

ViolaLass

A maxed out overdraft plus £40k savings is an interesting mix. Is the overdraft interest/charge free?

wonderer123

Well, basically the £40K deposit is an inheritance and definitely for a house deposit only! Rather than personal savings I could use to pay off my overdraft. I pay interest on the O/D but its only around £70 a month.

Dave_Ham

Get a broker or at least be mindful Natwest are the least payday loan friendly mortgage lender.

Let_Us_See

You are expecting to borrow just over 5 x salary with current OD maxed-out and payday loans? You will have to sort out your finances and re-think your mortgage strategy.

ACG

I genuinely think you will need to get a broker on this.

Most high street lenders are going to see pay day loans and maxed out overdraft and get worried. Are you able to clear your overdraft and wait a couple of months to show you dont actually need the o/d or pay day loans?

I know you dont need kicking here but using pay day loans in the run up to knowing your buying a property isnt the smartest thing to have been doing.

If you can wait, great you should be ok with a decent chunk of lenders if you cant then i really think you need to sit down with a broker with all 3 credit reports and see if they can work their magic for you.

kingstreet

As mentioned, NatWest will be an automatic decline and our network reports Nationwide tipping a case after the UW saw the PDL data on a bank statement, although they do not openly say they decline previous PDL users.

With PDLs and a big OD you are going to look like a poor risk, especially if your deposit is all gift and no savings.

amnblog

Pay day loans are horrifying to lender and rightly so.

What you are effectively saying by regular use of PD loans is that you are prepared to regularly overspend to fund a lifestyle you cannot afford.

Good luck, but you may find you need to wait until the PD loans are more historcial.

HeadAboveWater

wonderer123 wrote: »

I pay interest on the O/D but its only around £70 a month.

= £840 per year

= £5040 in 6 years