Mortgage application & history of payday loans.. help!!

YorkshireBoy

lisajane12345 wrote: »

Its an arranged overdraft though so as far as im aware they dont have a negative impact on a credit report?

It's debt! Moreover, it's my opinion that regular overdraft use (as opposed to a credit card or loan for example) says to anyone looking at your credit file that you're struggling from month to month.

But the most basic point you've totally missed is that the overdraft, whether it be fee-based or debit interest based, or a mixture of the two, is most definitely costing you a lot more that the savings interest you're earning on the same amount...maybe 6-10 times more!

In short, you're kidding yourselves you're saving for a mortgage! You're not...you're wasting money!

But good luck with it anyway.

lisajane12345

YorkshireBoy wrote: »

It's debt! Moreover, it's my opinion that regular overdraft use (as opposed to a credit card or loan for example) says to anyone looking at your credit file that you're struggling from month to month.

But the most basic point you've totally missed is that the overdraft, whether it be fee-based or debit interest based, or a mixture of the two, is most definitely costing you a lot more that the savings interest you're earning on the same amount...maybe 6-10 times more!

In short, you're kidding yourselves you're saving for a mortgage! You're not...you're wasting money!

But good luck with it anyway.

We are onky utilising a fee/interest free overdraft on one account so whilst I understand you're point I do disagree with it but thanks for the input anyway

YorkshireBoy

lisajane12345 wrote: »

We are onky utilising a fee/interest free overdraft on one account

At no point did you say it was fees and interest free, despite several of us picking up on it and suggesting paying it off. That's why we were labouring that point.

The first paragraph is still true though. No-one else, not least anyone searching your file for mortgage purposes, knows the overdraft facility is fees and interest free, so what you're presenting between you - for this current period of time - on your credit files is...

A history of payday loans AND still using an overdraft regularly/constantly.

And that won't look good.

And the benefit to you two, assuming "small" means £1,000, is £40 a year interest (so approx. £16 by the summer) if the £1,000 is sat in a TSB Plus account making 5% AER before tax. Is it?

And if "small" means £500, the benefit is £20 a year (so approx. £8 by the summer).

Is it really worth continuing to blight your credit files for the sake of an extra £8-12 towards the house deposit?

Think about it?

Thrugelmir

lisajane12345 wrote: »

We are onky utilising a fee/interest free overdraft on one account so whilst I understand you're point I do disagree with it but thanks for the input anyway

Maybe so. Last year PDL's were being obtained. This suggests that finances aren't being managed very well. In one would say fact carelessly. Lenders aren't interested in the reasons why. However from the credit history they can profile a potential borrower very well.

lisajane12345

YorkshireBoy wrote: »

At no point did you say it was fees and interest free, despite several of us picking up on it and suggesting paying it off. That's why we were labouring that point.

The first paragraph is still true though. No-one else, not least anyone searching your file for mortgage purposes, knows the overdraft facility is fees and interest free, so what you're presenting between you - for this current period of time - on your credit files is...

A history of payday loans AND still using an overdraft regularly/constantly.

And that won't look good.

And the benefit to you two, assuming "small" means £1,000, is £40 a year interest (so approx. £16 by the summer) if the £1,000 is sat in a TSB Plus account making 5% AER before tax. Is it?

And if "small" means £500, the benefit is £20 a year (so approx. £8 by the summer).

Is it really worth continuing to blight your credit files for the sake of an extra £8-12 towards the house deposit?

Think about it?

Oh I didn't realise overdrafts were negatively taken into account, I will certainly take this on board thanks

Fashion6

Hey,

Just wondering how you got on with your mortgage application as I am in an almost identical situation and very scared to even apply!

alchemist.1

Fashion6 wrote: »

Hey,

Just wondering how you got on with your mortgage application as I am in an almost identical situation and very scared to even apply!

I suggest speaking to a broker.

There are lenders who blankly refuse to offer a mortgage to someone who has had payday loans in the last two years. Others will see it as just another credit facility (if payments are made on time). Other scenarios will come into play such as affordability and size of deposit.

A good broker will know which lender is likely to offer you a mortgage, if at all (based on their experience and "off record" chats).