Overdraft application before completion?

moneyzoo

Hi all,

First post here. My partner and I are in the process of purchasing our first home. We would like to apply for an overdraft to ensure we are covered in case of any nasty surprises (extra legal fees, and a smoother first month).

We have succeeded in the mortgage in principal, and are currently in the process of having our application assessed.

Would applying for an overdraft with our current bank (HSBC) affect the process? Should we apply now while they haven't yet given their decision, or wait until it is successful (but before completion)?

I understand that applying after completion is the safest choice, but we would like to have this in place before completion.

woofdonkey

You risk having your offer reduced or withdrawn because you've taken on more debt. They could do this at any point until you get the keys, which could leave you in a bit of a pickle.

E.g. https://forums.moneysavingexpert.com/showthread.php?t=5930981

Personally I would save a 'nasty surprises fund' if you're really finding it difficult to budget. You could theoretically apply for an overdraft on the day of completion if you are concerned about having a 'smooth first month'?

AnotherJoe

This would be stunningly foolhardy. Don't do it. Read the thread on the first page of this forum about the couple who took out a car loan after exchange and have had their offer withdrawn after exchange and before completion. At least you asked before committing financial hari kiri. Put the sword down and step back.

If you are so close on affordability that you need an overdraft to get through your first month can you really afford to buy? Terrible basis to be starting off.

enthusiasticsaver

Don't do it. I suggest you cut back as far as possible and save. You should have got a quote for your legal fees so that should not be unexpected. Any borrowing during the application process right up until completion is not sensible.

moneyzoo

Thankyou all. Our thinking was that overdrafts were different from applying for loans.

But we are suitably spooked away from this idea (thankyou), have taken on your advice and certainly won’t be doing anything to alter our credit report until after completion.