Arranged overdraft..

amylouise39

Please delete thread - question answered

[Deleted User]

ODs can be withdrawn at any time, so you'll want to get out of it as soon as you can.

Living in one can be a warning sign to lenders that you don't have enough money to get through the month.

ACG

I am sure there is method in the madness, but how does not using the account allow you to clear it any quicker?

Assuming the same income and expenditure, how is it any different?

There are lenders who do not care about overdrafts as there is no monthly commitment to clear them, but who knows what will be around in 2 years time. Can you not just throw your savings at the overdaft and then save once it is cleared?

Takmon

amylouise39 wrote: »

It is more to do with the psychological benefit of it - instead of my wage just appearing to be in the negative after bills, it'll mean i'm in the positive when my wage is paid in..hope that makes sense?
I don't currently have any savings but the money I could save monthly will go towards the overdraft.

Do you really think it's realistic that you will save enough for a deposit to buy somewhere in 2 years time when your struggling to pay off a very small overdraft?. Where will the extra money come from to be able to save this amount?

phillw

amylouise39 wrote: »

It is more to do with the psychological benefit of it - instead of my wage just appearing to be in the negative after bills, it'll mean i'm in the positive when my wage is paid in..hope that makes sense?

I understand what you're saying, you'll feel great because you'll see all that money there. But will it help you clear your overdraft quicker? Or will you see all the money in your other account and think it's ok to keep spending? It sounds like sweeping your problems under the carpet.

I would keep it in one account and put a chart up on the wall showing your balance at the start of each month. Then you can see your debt decreasing each month and use that for motivation.

I assume your credit balance in another account will not be making the same interest as your overdraft is costing you, so it will actually take longer to pay off.

[Deleted User]

Take two months of that money and clear the overdraft.

Then get that money back from your relative and put it in your savings account.

Explaining to a lender why a relative is apparently giving you your entire deposit could potentially create problems that simply aren't worth the hassle.

[Deleted User]

If you don't trust yourself to keep hold of the deposit money and/or clear an overdraft, but you think seeing a positive bank balance will fix everything psychologically, are you sure you want to be accepting tens or hundreds of thousands of pounds in liabilities?

amylouise39

Deleted_User wrote: »

If you don't trust yourself to keep hold of the deposit money and/or clear an overdraft, but you think seeing a positive bank balance will fix everything psychologically, are you sure you want to be accepting tens or hundreds of thousands of pounds in liabilities?

I didn't say it would fix everything..it would just making easier (for me) to manage.
I do trust myself to keep hold of the deposit money, it's no different to putting the money in an ISA/LISA.

Dandytf

Deleted_User wrote: »

ODs can be withdrawn at any time, so you'll want to get out of it as soon as you can.

Living in one can be a warning sign to lenders that you don't have enough money to get through the month.

That was my past experience, online route wasn't brill though at least effective to pay most bills, never want that phone call again though, that's your o/d withdrawing and I'll cancel all your dd's and standing orders.
Thankfully some time has passed since 2012 including change of bank.
Not to frighten the OP more to reiterate overdrafts can be withdrawn at the discretion of bank/ building society at any time.
P.s. Nationwide have been amazing as mortgage providers since 2009 and their online deal ending choices are excellent.

BoGoF

If you want to buy a house then get out of overdraft asap. As has been said living constantly in an overdraft is not good in a lenders eyes.

They will see it on your credit report so you thinking they will only want 6 months statements is not going to hide it.

Takmon

amylouise39 wrote: »

I'm currently paying £400 a month to a family member who is saving the money for us, and will gift us money to top this up for a deposit / fees.

That doesn't make much sense considering you owe £800 so like zx81 says you need to use this money to clear the overdraft ASAP and save the money yourself so their are no issues when you apply for a mortgage.

You will also be able to put the money into a high interest regular saver while you are saving. I bet your family member won't be putting it in a high interest account and giving you the interest when they return it.