Help to Buy - Overdraft for one person

Asatari

Hi, looking for some guidance / advice on what to do in my current situation.

My partner and I are looking to buy our first home (flat in London) under the Help To Buy Scheme with a 40% government stake, 5% deposit and 55% mortgage.

We have been cleared through an Agreement in Principle by the mortgage broker, but I realise this doesn't actually mean much.

Our concern currently is that my partners overdraft may hinder us. She has effectively been living in her overdraft for several years and treating the maximum overdraft as a 'zero balance'. She also previously had high credit card debt but this has been paid off in full and credit cards have not been used since (roughly 1 year ago?).

I earn a decent salary and can easily afford the entirety of the mortgage myself, but will my partners less-than-ideal credit situation affect our eligibility or just the rates offered on mortgages?

If it's relevant, the mortgage we are applying for is between 3.0x and 3.6x our combined salary, with mine being substantially higher. My credit rating is excellent and I have never missed any debt payments, have no outstanding loans (other than the usual mobile phone etc.). I also have a credit card with a c.£35k facility of which I never use more than £1,500-£2,000 per month, and is always paid off in full.

Help or advice much appreciated!

sean_silva

I believe most lenders use ONS stats for outgoings and only note things like credit, childcare, maintenance etc. which sets you apart from others.

There are one or two who analyse every penny you spend who seem unable to comprehend that if you hit a bad patch you will actually stop spending on some of the things we would normally term "discretionary". Avoid them and you should have a trouble-free application.

Few planned overdrafts won't hurt much, but if your partner into a habit of using unplanned overdrafts each month regularly you may have a problem. I will advise you to straight up with mortgage adviser, discuss these things prior to submitting an application. Any good MB will recommend you products accordingly your circumstances.

Yes, make sure you hire a good MB.

Asatari

Thank you for your reply.

Partner has been using her entire overdraft, I.e using the £2,000 authorised facility as effectively a 'zero balance' for about 5 years now. We paid off the overdraft today in full so she now has a positive balance. Hopefully this makes a minor positive impact....

MB doesnt seem to think it will be a big issue if paid off.