HTB phase 2 and overdrafts

lizards

In the new year we're hoping to apply for one of the new phase 2 Help To Buy mortgages.

I've been keeping a close eye on our finances for the last few years, including our credit reports. There's nothing bad (no late payments, defaults etc) on any of them. I know it means little, but Experian has us both at 999. We're registered to vote, no outstanding loans (although excellent history of paying back loans in the past) and minimal credit card debt we can pay off before completion if necessary. We also had a mortgage with no issues for 8 years until May - we're currently in rented. Affordability should not be an issue as far as I'm aware.

However, what I didn't realise was that using an authorised overdraft on our joint current account was an issue until recently. It's a £500 overdraft and we spend most of the time in credit but towards the end of the month we go into the overdraft, often up to the maximum. On a few occasions in the last six months we've been careless and gone over the maximum but it has been fixed within a few hours of getting the morning text telling us. This is despite having savings to prevent this - so it was quite unnecessary, just convenient and sloppy :mad: @ self.

Well, we know better now. The question is - how dim a view will a lender take of this given everything else checks out and is textbook? I know they're going to be extra strict for Help to Buy. It goes without saying that we'll be keeping everything in the black for the next two months and not using any overdrafts at all, but ideally we'd like to start applying for mortgages etc in January. Unfortunately due to life circumstances, we're somewhat limited by time if we're going to buy any time soon, and three months of bank statements handed over in January is going to show the previous issues we had on the oldest one.

Thank you for any insights!

dgtazzman

If nothing is flagged on your CRA reports, I would just behave nicely from today on and stop using that overdraft. If you don't use your own bank for the mortgage, the lender won't have insight into your account conduct beyond what you send them and they mostly don't ask for more than 3 months worth of statements, meaning you'll be good to go come February.

Thrugelmir

Stop using the overdraft facility. Perhaps settle your credit card debt as well in order to show a better picture of yourselves.

lizards

Thanks! Yes, will definitely not be using any overdrafts from here on out. Fortunately we barely touched it this month - went over by a few quid this morning due to my husband using the wrong card [argh!] which we quickly fixed and that was it.

Will definitely settle credit card debt before applying properly then - thank you!