Does business overdraft affect mortgage application?

JadeC93

Hello,


Me and my husband are looking to buy our first house. My husband has had a limited company back in early 2015, it hasn't been trading for the past 2 years as he is waiting to close it down completely once he has paid off his business overdraft. (currently about £3.5k) - He has had a permanent employment since late 2015.


We have 10% deposit saved for the house and looking to submit our application soon, but we are now worrying whether his business overdraft would affect our application? - he has been making payments every month (about £200) and we have checked on all of the credit reports, none of them pick up on the business overdraft as it's against the business not a personal debt.


We both have excellent credits and have no other debts against us, so we just want to check if this would affect us getting a mortgage or not (or even mention it at all)? - We are looking to get ours with Nationwide.

BoGoF

Is there a personal guarantee for the overdraft?

It could cause problems if the lender asks for bank statements and they see £200 going out every month which you haven't told them about.

JadeC93

Hello, no there is no personal guarantee for the overdraft. We don't have a problem in telling them but just don't want this to affect our application. We have enough income each month to pay for everything.

BoGoF

If you have no other debts then why are you only paying £200 to clear the OD.....surely that has interest/fees?

Thrugelmir

Sounds as if the overdraft should be disclosed. As in effect a personal liability as the Company has ceased to trade.

The fact that the overdraft isn't disclosed on the CRA's isn't relevant. Onus is on you to complete the mortgage application form truthfully.

JadeC93

BoGoF wrote: »

If you have no other debts then why are you only paying £200 to clear the OD.....surely that has interest/fees?

We could (if we have to)but it will leave us short with the deposit. We are hoping we could just put this down as a monthly commitment.

BoGoF

JadeC93 wrote: »

We could (if we have to)but it will leave us short with the deposit. We are hoping we could just put this down as a monthly commitment.

But that £200 per month could well reduce the amount you can borrow. If you have a play around with some online calculators and do it with and without a £200 per month commitment you could be surprised at the difference.

JadeC93

BoGoF wrote: »

But that £200 per month could well reduce the amount you can borrow. If you have a play around with some online calculators and do it with and without a £200 per month commitment you could be surprised at the difference.

I have been playing around with the online calculators, it doesn't affect the amount we can borrow. I guess we will need to speak with the mortgage advisor and find out!