Any negatives of taking out an Overdraft?

mark2200

Hi,

im in the process of applying for a mortgage, just trying to build up my greens on my credit reports for now and apply for one in the next couple of months.


Im just wondering, as yet i dont have any overdraft on my accounts and i was thinking would it benefit me in some way if i took one out? Im with Natwest and have the Advantage Gold account. Im sure if i wanted one i could get atleast a few thousand £'s as ive banked with them for about 6 years now and always managed that account well.

Now this Overdraft wouldnt really be used, but it would just be there 'in case' (which still is probably never).

So im wondering if the process of applying for one and getting the overdraft would have any negative effects in my goal of being granted a mortgage?? Or would it have any positives? ie. in terms of having more available credit?


Help would be much appreciated:beer:

National_Debtline

Hi Mark

Not all banks necessarily report overdraft facilities to the credit reference agencies, in which case opening one might serve little purpose in the context of a mortgage application.

One of the other issues to consider is that a potential mortgage lender will look at what credit facilities are available to you at the point of applying - in other words, how mcuh debt you could potentially go into using existing facilities. This means that you could have 4x credit cards with £0 balances, but if the limits on those cards totalled, say, £25K, the lender might be a little spooked by that "potential" debt, if you see what I mean.

One other point: you would typically be asked to provide your last 3 months of bank statements in the course of a mortgage application, as you are probably aware.

Regards

Dennis @NDL

Thrugelmir

Twisting the question around. There's no positives in terms of a mortgage application.