Been living in student overdraft for years and partner is unemployed. Will this affect us renting?

lordnadez

I am 24, the partner is 23. I am on 35k per year and take home 2.2k per month, and she has been unemployed since Jan 2022.

We are looking to rent our first home, the first home has asked for our financial info. Specifically, the last 3-month bank statements.

I have been living in a 1.5k (Now 2k since last year) overdraft since I was around 19. There are no fees to it and I have to pay off 500 per year from 2022 onwards by the banks Student Account policy.

Would this, in combination with my partners current financial status, stop us from getting a rented house in any way or affect our chances?

We are looking to rent a £400 - £500 per month home.

HampshireH

You may struggle

If your earning over £2k a month and living in your overdraft it either shows you have high outgoings, either debt or unaffordable lifestyle

Or that you are really bad at managing money.

Why are you living in your overdraft? I would suggest you clear it get yourself in the black and then start saving. 

As it stands on paper you can't afford the rent and many agents will want to do an affordability check as well as credit check

sourpuss2021

One rule that's sometimes used by agents is that your yearly income should equal or exceed 33 times the monthly rent.    

With a rent of £400 then, you'd need to be earning £13,200+.    And £16,500 for a rent of £500.  So if the rent is just £400-£500 a month and you are earning £35,000 you should be fine!  It's clearly well within your budget.   But I guess it depends on how much competition you're up against.

Something to remember is that utility bills can stack up to more than you might expect. It can easily be another £300+ for council tax, gas and electricity, water, and broadband.   Plus optionally you might want a TV license and contents insurance for another £25 or so.  So you could be looking at total costs of £700-£825 for rent and bills.

Good luck!

MaryNB

lordnadez said:

I am 24, the partner is 23. I am on 35k per year and take home 2.2k per month, and she has been unemployed since Jan 2022.

We are looking to rent our first home, the first home has asked for our financial info. Specifically, the last 3-month bank statements.

I have been living in a 1.5k (Now 2k since last year) overdraft since I was around 19. There are no fees to it and I have to pay off 500 per year from 2022 onwards by the banks Student Account policy.

Would this, in combination with my partners current financial status, stop us from getting a rented house in any way or affect our chances?

We are looking to rent a £400 - £500 per month home.

Most letting agents will be more focused on if you've ever had a CCJ - i.e. you've failed to pay bills in the past. I'd be surprised if use of an overdraft is a major issue. As above, I've had my annual salary checked to see if it's 30x the monthly rent. 

On a separate note, using your overdraft on a regular basis is bad for your credit history. An overdraft should only be used in emergencies. Credit cards are better for regular use of credit. On a £35k salary with £500 rent you shouldn't be in your overdraft. You need to assess your finances and see how you can manage your money better.

Section62

MaryNB said:

On a separate note, using your overdraft on a regular basis is bad for your credit history. An overdraft should only be used in emergencies. Credit cards are better for regular use of credit. On a £35k salary with £500 rent you shouldn't be in your overdraft. You need to assess your finances and see how you can manage your money better.

If the overdraft is 'free' (as a student) the dynamics could look different... although not necessarily a good idea when looking for credit and/or renting.

pinkshoes

If you take home £2200 a month, currently living rent free (?? - I'm making this assumption as you say you are wanting to start renting) and living in your overdraft, then what on earth are you spending your money on?????

In terms of affordability, then your salary is fine for such a low rent (in my area, £450 a month would get you a single bedroom in a shared house!), but if they want to see bank statements, then earning so much yet spending more than you earn won't look good. 

It might be a good idea to take a good look at your spending patterns.

Slithery

lordnadez said:

Would this, in combination with my partners current financial status, stop us from getting a rented house in any way or affect our chances?

Yes.
There is a massive shortage of rental properties at the minute. Why would a landlord who has dozens of potential tenants choose you instead of someone that isn't always living in debt?

lordnadez

pinkshoes said:

If you take home £2200 a month, currently living rent free (?? - I'm making this assumption as you say you are wanting to start renting) and living in your overdraft, then what on earth are you spending your money on?????

In terms of affordability, then your salary is fine for such a low rent (in my area, £450 a month would get you a single bedroom in a shared house!), but if they want to see bank statements, then earning so much yet spending more than you earn won't look good. 

It might be a good idea to take a good look at your spending patterns.

I JUST started taking home 2.2k.

My previous job was 1.6k. I started my new job this month.

My rent is £440 per month currently at home, plus, I pay for a lot of things for my partner as she is currently unemployed. Also have to pay for all my own food and such.

GDB2222

It may help if you can get a personal guarantee. 

RAS

OK, so spend the next three months clearing down that overdraft and the next three building up an emergency fund.

Mean-time you and GF sit down together and start to build up a budget, based round your current spends.

And then work on your joint future budget.

I appreciate that seeking employment can be almost a full-time job, but for sanity's sake and her CV a couple of days, or evenings a week part-time work might be a good idea. The best way to increase your joint income is for her to take employment that covers her NI contributions and utilises her tax free allowance. 

Having once received 19 rejection letters in one day, I know how demoralising constant failure is. And having received over 200 applications for a decent job, I know that even if you tick all the boxes, you may not even get an interview.

It's not as if anyone even sends rejection letters now, so there's not even the certainty of a decision from which to move on.

Best of luck, to you both.

ciderboy2009

lordnadez said:

I JUST started taking home 2.2k.

My previous job was 1.6k. I started my new job this month.

My rent is £440 per month currently at home, plus, I pay for a lot of things for my partner as she is currently unemployed. Also have to pay for all my own food and such.

Ok - so after rent you had over £1,100.

I'll be generous and estimate £300 for food - that still leaves £800 per month.  This is now £1,400 per month.

If you use £500 out of the extra £600 you're getting each month then you will pay off the overdraft in four months - that is the point you should be considering renting your own place.  It also gives your partner 4 months to get a job.

You should also be saving as much as you can - when renting, after the initial contract term, you never know when you might have to find another place to rent so you need to make sure you have a new deposit saved up (some landlords will delay repaying your deposit as long as they can.  Presumably you have enough saved for a deposit already?  Also enough to buy all of the bits and bobs you will need in a new house?