Do mortgage lenders only take into account credit cards not overdrafts?

olympicsmummy

Hi all

I have a good deposit and income but I have £2000 overdraft and £2000 on credit card. I know I can increase my overdraft to £4000.

Am I correct in thinking most banks take into account your credit card debt when calculating mortgages but NOT your overdraft? If that's the case I will pay off my credit card with my overdraft to get a higher mortgage. (My situation is I have a £90 000 deposit which will be around 50% of the purchase price .. so I am only borrowing a 50% mortgage)

Am I correct? Thanks in advance

Thrugelmir

Lenders will view your overdraft usage (last 72 months) when accessing the data from the Credit Reference Agencies. Depending on their own internal scoring system they will factor this into any decision made.

In general regular overdraft usage is scored negatively.

olympicsmummy

Thrugelmir wrote: »

Lenders will view your overdraft usage (last 72 months) when accessing the data from the Credit Reference Agencies. Depending on their own internal scoring system they will factor this into any decision made.

In general regular overdraft usage is scored negatively.

Thank you for your reply... Do you know what is viewed "more negatively" if that makes sense? I.e. should I leave it as it is £2000 O/D and £2000 credit card or should I put it all on an overdraft or all on a credit card? Just trying to work out what is best? Thanks again

Thrugelmir

The datasets that lenders have access too. Enables them to automatically score your credit usage, the underlying trend (whether you are repaying debt / steadily borrowing more) etc.

Ultimately the lender will determine whether advancing you a mortgage is affordable. In addition to this, in light of the way that you conduct your personal financial affairs. Whether they (the lender) is acting responsibly in doing so.

Why not clear your debts if you have such a sizable deposit?

olympicsmummy

Thanks. Not re-paid the debt as the deposit is from my parents.. they wouldnt be happy if they knew I had overdraft/credit card debt!

Typhoon2000

Really clearing you overdraft and credit card is the the best way to go.