Mortgage and overdraft usage

roje

I'm scaring myself reading horror stories online.

I have an AIP with Natwest (my own bank) for a mortgage via a good mortgage broker (at a very good rate fixed for 5 years).

I have £140k deposit and want to borrow £110k. I am single with a fairly good income but as I have 4 dependants, Natwest was the only bank who would give me an AIP for the amount I want.

I have an excellent credit score (989 at last check I think), have never missed a payment, currently have a natwest unsecured loan of £13k which I am consolidating with proceeds of house sale (Natwest are aware of this). As I have settled on a house below my initial budget, I will also have another £10-15k equity which I want to use to pay off my overdraft and to update my new property (carpets, new kitchen etc). At the AIP stage I did not mention my overdraft as rightly or wrongly, I often forget about it and don't consider it a debt (no judgements please, I realise it is, I'm not stupid ). I have an agreed overdraft limit of £3k and often use half of it by pay day and then it clears again and so on. This has improved this year as I used to use more of it but I've cut back on spending for the past 6 months or so in preparation for the house move etc.

I've only just thought about my overdraft usage after reading some reviews of natwest mortgages and seeing some people saying that using their overdraft led to the mortgage being declined. I had no idea about this. Is this even the case if you can prove you can consolidate it with remaining proceeds?

I will be asking my broker but he is currently on holiday and I'm having a bit of a panic about it all. I can't believe I didn't think about it when we were submitting info, but as the broker asked specific questions about credit cards (I have zero balance on a natwest one), loans etc it didn't occur to me. Is this going to mean they flat out decline me now?

Teqpro

Sorry if i scare you, but I've recently purchased a new property and it gets built in November. Now I've been told directly from my lender and seen lots of stories on this forum that i must make sure my payments are upto date and I'm not take out any further credit. I'm expecting at least 3 credit checks

I bank with Natwest also and unfortunately when your overdrawn if you do not pay the full balance on the last day of the month; then it will appear on the top 3 CRA's records as outstanding debt the same as a credit card bill. Also the CRA's will have a full history of all the times you went overdrawn and by how much.

If i was you i would use some of your deposit to pay off your debts

roje

It's already on my credit file but isn't causing an issue with the score? It's an authorised overdraft.
My deposit is from my equity so until the sale completes, I won't have the money. I intend to use it to pay off the overdraft but I can't do that until the funds are clear and I will need to apply for the mortgage before then as I only accepted an offer on my house just over 2 weeks ago.
Would it make much difference to pay it off in full now as when they look at my last few months statements they'll see that I was overdrawn until very recently? I could potentially borrow it (privately I mean, not more debt on my credit file!) until the house sale completes but I don't know how much difference it would make?

Teqpro

Ok its an authorised overdraft but is still classed as credit.

For me after i paid my 5% deposit, transferred some money from my savings; meanwhile i was overdrawn by £1000 so i asked my family members to lend it me for 2 days, this got me out of the red by the month end.

I am sure someone will advise you better.

roje

I've arranged to borrow it from a family member to put my account into the black. I'm debt free otherwise so hoping that it should strengthen my application even if it's only recent. Thanks for the advice.

Sauvignon_Blanc

We have an authorised overdraft which we use. My mortgage broker said as long as it was cleared by our wages each month it would be ok.

We got a DiP from Natwest and my broker had told them about the overdraft. Surely they would have seen your overdraft when they credit checked you?

amnblog

Roje, you need to find something else to do with your weekend.

The chances of an authorised overdraft tripping you up if used within limits are zero.

roje

I like your style ;-) I'm a worrier by nature. That is very reassuring so thanks, I've read stories where people have said they've been declined due to overdrafts and my mind is working overtime.

amnblog

As I tell my clients - it's the broker's job to do the worrying.

*Kat*

Our broker said that overdraft doesn't matter, you can go into it as much as you want as long as you don't go over and obviously state your OD at application stage