Mortgage with a small(ish) overdraft

ARPUP

Hi,

My girlfriend and I have recently got an agreement in principal, and have had an offer accepted for a flat. It's in my name as she doesn't have 2 years worth of self employee earnings.

I am usually in my overdraft at the end of each month, by around £300. As soon as I'm paid every month it obviously pays it off. It's never normally for more than a week or so. Would this be a problem for getting the mortgage pushed through? Our mortgage advisor is a private friend of the family, who isn't charging if that helps too.

Any help or advice would be appreciated.

ARPUP

Hello by the way. Sorry, had all that typed up in my head I forgot to say hello. So, Hello everyone. First post

Annisele

Presumably you have a deposit saved elsewhere? And the deposit is solely yours, and not joint savings with your girlfriend?

Going into an agreed overdraft certainly isn't an absolute bar to getting a mortgage - but it would have been better if you hadn't done it. If you're only wanting to borrow 60% of the value of the house, I wouldn't anticipate many issues. The higher your LTV (loan to value), the more issues I'd expect.

GMS

Where is the deposit coming from?

Speak to your broker with any concerns you may have. They should be helping you with the process

casparg44

Hi I would not worry at all about the overdraft, as long as they can see its being cleared every month. In a way this is seen as a positive thing as you can show that you can have and manage credit well- like you had a credit card and paid it off in full every month!

One thing they may question however is affordability, its would be much better to get a credit card with a £300 limit and pay it off monthly in FULL then show that you have a overdraft facility that you don't use! weirdly the banks love it when you don't use a facility!! this is rather than looking like you live on the edge!

Try and get a card with capital one small limit and dont use the overdraft!

kingstreet

There are lenders who accept income from self-employed with only one years' accounts/SA302, so I would concentrate on a joint purchase/mortgage first.

Thrugelmir

casparg44 wrote: »

Hi I would not worry at all about the overdraft, as long as they can see its being cleared every month. In a way this is seen as a positive thing as you can show that you can have and manage credit well- like you had a credit card and paid it off in full every month!

The overdraft isn't being cleared though. As it requires the next pay cheque to bring the account into credit. Then subsequently slips back into the red again. Demonstrates that money isn't being managed well. As an unexpected expense could soon cause the situation to deteriorate extremely rapidly.

Wozza85

Based off my personal experience, I had an overdraft of £500 and i used it every month or most months as a habit, my salary cleared it every month but then i went back into all the time, sometimes £470 into it, and Santander agreed to give me a mortgage with 5% deposit at that. So I'd say its obviously better to not use your OD facility but then at the same time some lenders wont mind it!

traceyhealy88

we got declined for a mortgage by natwest for being £50 into an overdraft for 1 month. Got approved by halifax but they didnt ask to see partners bank statements and he was the one who had gone into the overdraft.

ARPUP

Thanks everyone. Seems that it depends on the lender.

Overdraft is cleared now and will be due to change of circumstances. Ill let you know for future reference

ARPUP

P.S deposit is 10% but can't dip into it .