Are you allowed to pay a 5% deposit from existing overdraft / credit cards?

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theone999
theone999 Posts: 203 Forumite
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in Mortgages & endowments
I am looking to try and get a mortage in 6 months time for a 100k property. So 5k deposit is needed. I have over 5k in overdrafts / credit cards, so was wanting to pay those off first by working over time.
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  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    Few lenders like a borrowed deposit.

    Don't forget to also save for your other costs.
  • theone999
    theone999 Posts: 203 Forumite
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    so if I had a 3rd bank account that was basic, and had 5k in it, because I have put the living expenses on overdrafts/credit cards from my other 2 accounts, that would look better?
  • BoGoF
    BoGoF Posts: 7,099 Forumite
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    Then by having debt on a credit card this could affect affordability.

    And an overdrsft won't look good.
  • theone999
    theone999 Posts: 203 Forumite
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    BoGoF wrote: »
    Then by having debt on a credit card this could affect affordability.

    And an overdrsft won't look good.
    my credit card is with Halifax, they seem to be nicer about credit. I remember a couple of years ago when I had money troubles, they were the only bank that didn't bother me about it as long as I didn't go over anything. One bank decided to call in their entire overdraft despite not going over (i told them if you want all of it I will declare bankrupt and you won't get a penny, they set up a repayment plan instead), the other sent warning letters. My overdraft with other bank is an approved overdraft that has been there since student account and never removed, because i've never left it.
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,621 Ambassador
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    I think you will need to save for longer. First because most lenders want 10% deposit and no outstanding debt and secondly because there will be additional costs.
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  • BoGoF
    BoGoF Posts: 7,099 Forumite
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    theone999 wrote: »
    my credit card is with Halifax, they seem to be nicer about credit. I remember a couple of years ago when I had money troubles, they were the only bank that didn't bother me about it as long as I didn't go over anything. One bank decided to call in their entire overdraft despite not going over (i told them if you want all of it I will declare bankrupt and you won't get a penny, they set up a repayment plan instead), the other sent warning letters. My overdraft with other bank is an approved overdraft that has been there since student account and never removed, because i've never left it.

    Being 'nice' about an overdraft doesn't mean they will lend you £95,000.

    And agreed or not, using an overdraft is a sign you are living beyond your means.
  • middleclassbutpoor
    middleclassbutpoor Posts: 774 Forumite
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    Depending on your 'money troubles' you may find you need more than 5%
  • theone999
    theone999 Posts: 203 Forumite
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    BoGoF wrote: »
    Being 'nice' about an overdraft doesn't mean they will lend you £95,000.

    And agreed or not, using an overdraft is a sign you are living beyond your means.
    lending on a house is absolutely risk free. there's a house to reposess.

    and paying a mortage is going to be cheaper than paying rent.
  • middleclassbutpoor
    middleclassbutpoor Posts: 774 Forumite
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    It is certainly not risk free.. By the time they have ousted you, paid for all the changes of the locks, the estate agents, added in the missed mortgage payments and the interest on that, it would be a loss maker - especially with a 5% deposit...

    It may be cheaper on a mortgage but you become responsible for upkeep/maintaining of the property and will have additional costs such as building insurance to pay. I believe aiming to own is better than renting in the longer term but your views appear quite short-sighted with how risk is assessed .

    Again with your money troubles - if you think its just a case of you can hand the keys back if it all goes wrong, I would seriously suggest you get some advice on what would happen and the impacts of this and the reason why lenders have criteria for lending is because they have a risk appetite based on what they believe will minimise their chances of repossession.
  • kingstreet
    kingstreet Posts: 38,786 Forumite
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    theone999 wrote: »
    lending on a house is absolutely risk free. there's a house to reposess.

    and paying a mortGage is going to be cheaper than paying rent.
    No. The risk is having to repay the remaining/excess debt after the property is sold for twelve years, unless you choose bankruptcy.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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