Applying for a mortgage with a student overdraft?

ahj2000 · 21 January 2024 at 8:42PM

Hello, I will do my best to explain my circumstances but I’m just looking for a bit of guidance as a First time buyer from anyone who knows or has experienced a similar circumstance.

I graduated university last year and at the time was given a £3000 student overdraft from nationwide (I regret maxing this out).

As of today, I’m in secure full time employment in finance. I have 3 credit cards. 2 have £0 balance but each a £1,500 limit. The other has a £1000 limit with £500 balance.

I then have my student overdraft which now sits at £2,500. The terms of this overdraft means that it will remain 0% for the next few years but will gradually reduce overtime.

I do not use this account anymore , or do anything except pay into it. I do however , use my other nationwide account as my main bank account.

Now I’m looking to apply for a mortgage in about 4-5 months time , I already have my deposit and currently enough for the fees involved too.

I’m aware an overdraft will impact my application, though my credit history is very good, never had a missed payment , and apart from the OD back in uni I have been responsible, I save regularly too.

So essentially I’m wondering what the impact of a 0% student overdraft will be on a mortgage application? How will they assess this when there is no interest/set monthly amount involved ? By the time I put my application in I will have cleared another £1,000 off it.

I appreciate any guidance / advice. Thank you.

lika_86 · 21 January 2024 at 8:57PM

So you're currently £3k in debt? What's your salary like? If a lender required it, could you clear the debt before completion?

youth_leader · 21 January 2024 at 9:55PM

As you won't be looking for four or five months, could you pay off the overdraft? Aim for £500 per month? Write food plans and take lunch in to work and flask for coffee, cycle in if possible to save petrol, spend the minimum on your social life?