Pay back overdraft or put into savings before full application?

jls85

Hi all,

Looking for some advice if possible please?

I am currently in the process of applying for a mortgage. The house I have reserved won’t be built until April next year, and most of the deposit I have will be coming from my bonus, a gift from my parents and my savings between now and then. At the moment, I have £950 in my savings account and another £850 due to come in from the sale of my laptop (I have a work one now so don’t need it). However, I also have an £800 overdraft that I usually use fully every month out of habit only. I have never gone over my agreed limit.

I am due to send my statements to the mortgage company for my full application, and I was wondering if it would be better to pay off the overdraft with my laptop money, or to add it to my savings so my deposit looks bigger?

Thanks in advance!

stator

Your statements won't look very good. Do you have to apply for the mortgage now? Would be better to pay off the OD then wait 3 months and send in your new ones.
I doubt they will ask for your deposit savings account balance, but the fact that you don't have it yet is slightly worrying. Are you sure you're not being over optimistic?

Thrugelmir

Your overdraft will appear on your credit file so no hiding it. Lenders will look at your spending habits to see why you overspend.

Paully232000

Thrugelmir wrote: »

Your overdraft will appear on your credit file so no hiding it. Lenders will look at your spending habits to see why you overspend.

I think this must depend on the bank, as one of my current accounts, with an overdraft, doesn't appear on any of the credit file services. Not sure why, although I think it may be to do with how old the account is?

jls85

Oh no really? My broker didn't seem to think my overdraft would be an issue. I do have to apply now if I want this house, yes. I'll definitely have enough though, it's a 5% deposit and a £75k mortgage on help to buy. I've been verbally promised a £4k bonus which will be paid in February, as well as my savings between now and then and a £1k gift from my parents. The broker said the lender would understand that I have until April to get the deposit together?

And I wasn't trying to hide the overdraft, I was just wondering if that and a larger deposit would look better than a recently paid off overdraft but smaller deposit?

jls85

Also, they have asked for proof of the savings account statement.