New Overdraft since mortgage offer but not yet completed

LadyA2023

Hoping I can get some good advice.
I am buying a property due to complete end March.
Mortgage offer was accepted in October on the basis of repaying some debt. This has been done. Mortgage offer is a whole year so no risk of this expiry before completion.

Due to some sticky situations at Christmas I had to increase and use my overdraft on current account - which was £0 during acceptance.
Overall debt has dramatically decreased from acceptance however anxious overdraft will cause completion problems. 

My credit score has not decreased and our overall affordability I don’t believe has changed due to OH income being very high.

sheramber

Can you clear the  overdraft before completion?

theartfullodger

Indeed: What options do you have to pay off overdraft: Without getting into any debt situation?

Think if lender finds out themselves rather than being told by you & saying what you are doing about it... we can guess what happens...

LadyA2023

I don’t have the full means to clear my overdraft before completion- I was hoping as overall debt had decreased so much I wouldn’t have any issues

EssexHebridean

The bigger question here for me is that it sounds as though you are about to enter into the commitment of a mortgage whilst not having your household budgets under control. That genuinely can be a recipe for disaster - not least as you have seemingly recently cleared debt also. 

You need to go through your budgeting immediately IMO - and ensure that things like costs incurred around Christmas and similar "one off" events are budgeted for across the year. Likewise insurances - these are always cheaper paid up front and then saved for monthly. (1/12th of the cost of the previous year's premium, plus 10% to account for increases) Similarly, do you have an "emergency fund" in place? Finally, make sure that all costs around the move itself are budgeted for.

Having worked hard to clear the previous debt, the last thing you want is to create more of it (aside from the mortgage, which is a different matter) by failing to budget properly going forwards. It might help you to create an SOA (Statement of Affairs) for yourself using the link in my signature, as this can be a good way of getting all your income and expenditure planned out - it is also good at prompting you to think about your spending in the various areas. 

Lenders see overdrafts very different to other forms of debt - some will view being in an overdraft as a sign of a poor grasp on finances, and others will see it as a "red flag" simply because the OD can be called in at any time, and with no notice. 

LadyA2023

sheramber said:

Can you clear the  overdraft before completion?

Not easily - I appreciate this would be the safest bet

LadyA2023

theartfullodger said:

Indeed: What options do you have to pay off overdraft: Without getting into any debt situation?

Think if lender finds out themselves rather than being told by you & saying what you are doing about it... we can guess what happens...

I don’t have the full means to clear my overdraft before completion- I was hoping as overall debt had decreased so much I wouldn’t have any issues

propertyrental

Quite apart from the question of whether your lender will re-evaluate your ability to fund the mortgage, do you feel you'll be able to manage the mortgage?

Noneforit999

Some great advice here already, it sounds like from the limited information posted that you need to quickly get a handle on your incoming and outgoings before you commit yourself to a mortgage.

My experience of mortgage lenders actually checking debt has been paid off prior to completion is that they don't actually check, although mileage may vary. We had two car loans totalling £600pm and our affordability was not enough with these payments outstanding. I was planning to clear them but the mortgage lender made it a requirement for affordability, they never checked however but I guess some do. 

With a year long offer, its likely the lender will do at least one more credit report search before completion, you may find they do one just before completion but they also may not. If you cannot clear the overdraft fully and you were tight on affordability in the first place, the lender could pull their offer but there is no way for us to know that. 

Flugelhorn

LadyA2023 said:

sheramber said:

Can you clear the  overdraft before completion?

Not easily - I appreciate this would be the safest bet

Honestly buying houses is seriously expensive - I mean apart from the actual cost of the property, fees etc. You seem live in the DIY shop, IKEA etc etc - and there is always something that needs doing to the place electrics / plumbing etc etc etc 

Don't do it without a bit more of a buffer (and not overdraft type buffer) 

Chemistry777

Our lender (nationwide) did a hard credit check when we originally applied for our mortgage (August 22) but that was it, they did not check at exchange or completion.   From the mortgage forum, it seems some lenders may also check prior to exchange.