To ask about overdrafts/mortgages

[QuizTeamaAguilera]

We've put in a mortgage application which has been initially approved, but we need to drop off 3 months' bank statements tomorrow. Does it matter if we're in authorised overdrafts? We never go over them and we manage to pay everything we have to.

Hi, with both my first and second houses, my bank statements clearly showed me regularly going in and out of the overdraft throughout the 3 months, and I had no issues at all on either purchase Good luck! X

I'll like to think you'd be fine. I'm basing this on my experience getting a personal loan not a mortgage though. I'm always in my overdraft (but like you, never go into unauthorised) and I was loaned the money. The bank said I proved I could still pay all my bills even though I was regularly overdrawn. There's some weird logic there

Yes - you're giving the impression you cannot manage money very well and can't live within your means. They may still give you a mortgage though I would imagine it will affect your deal.

Sorry, but we had the opposite experience to your first two replies. Despite having a mortgage in principle agreed of £150k (more than we'd asked for), we had our actual application of £120k (LTV 40%) turned down because we were frequently into (but never over) our £500 overdraft. No CCJs or dodgy debts etc - they told us the reason they were turning us down was because we frequently used our overdraft.

This was with HSBC; Nationwide then lent it to us straight away.

Yes, being in an overdraft shows a bank you can't manage your money. I'm not saying it will be the deciding factor as to whether you're approved or not but banks will see it as a negative point, yes.

I use part of our OD every month - just had our mortgage application accepted no issues. Never go over the limit (or approach it actually).

I work in banking. Every lender is different but if it's authorised and you pay any fees on time I can't see why it would negatively affect you.

I was £1k in an overdraft when I bought my house, I saw the underwriters note on my file, was along the lines of "overdraft used regularly but has enough in savings to pay off therefore can assume this is a lifestyle choice". It was, my savings were earmarked for my house specifically and the overdraft was used purchasing things for that house. Wasn't a problem.

Depends on the finer points but you say you live in your overdrafts. If that means always having a negative balance then it is very likely to go against you.

Ah ok, thank you! A bit of a mixed bag. Mine's not a huge one and I don't pay any fees apart from a few pence when I do go overdrawn, DH's is slightly bigger but he was approved for a mortgage in 2014 and was in the same situation then (and earning a lot less). Fingers crossed it'll be ok...

Dipping into an overdraft, even by large amounts, but then repaying so the account is in credit every month should be fine.

Permanently living in your overdraft is often viewed negatively IME as it can be an indicator of financial difficulties...people with ordered finances don't generally stay constantly in the red, even if authorised.

I live in my overdraft and had no problem getting my last mortgage 2 years ago (Bank of Ireland) or my remortgage last month with HSBC.

Banks are weird and illogical.. I was criticised for using a totally free overdraft (no fees and no interest) even though I savings with the same bank that were much higher in value. I could have paid the overdraft off any time I wanted to, but it seemed silly to do so as it wasn't costing me anything.

I live in my overdraft and we both had credit card debt, but got a mortgage without any trouble about 18 months ago. We used a mortgage advisor and went with Halifax. We had a 15% deposit and borrowed about 2.5 times our annual income.

Although we were given a Decision in Principle, weirdly one of the things that came up as a negative was the Halifax hadn't been able to 'verify' us, even though we're both Halifax customers. The Halifax also hadn't been able to find us the register of electors (even though our credit check did) which went against us - I've had to get an email from the council to confirm that we are, and our mortgage advisor is going to speak to them tomorrow to give them all this info.

Totally agree they're illogical - just like credit checks, the fact that I haven't ever had a bank loan went against me, although the fact I'd not applied for any loans in the last 6 months was one of my 'positive' points!

Thanks welsh, similar story with us, they initially turned us down for 90% but we got a decision in principle for 85% (which we can just about do with help from my saintly DM)...hopefully we'll get it all sorted based on our salaries there was absolutely no problems but not being detected on the register of electors (although we are on it) weirdly went against us!

Ooh its Halifax? Prepare for them to mess you about and probably decline you in the end. They are horrendous. We recently got over £3000 in compensation from Halifax after they messed up our mortgage. And funnily enough I am a mortgage advisor for a competitor although I didnt tell them that! So i knew they were in the wrong, proved it and got loads of rightly deserved compensation. How big are the overdrafts? Are you in credit for at least some of the month? It may or may not be an issue, it depends on the financial institution and the underwriters opinion.

Also to add our mortgage was with them before i worked for the competitor, we were trying to change it and in the end they paid and helped us leave them as they had messed up so spectacularly! We're now with the place I work thankfully!

happy that's ridiculous! Glad you got sorted in the end. Mine is only £200 and I'm certainly not in it the whole month, DH's is bigger and I think he's in his a little bit more as he has more outgoings (he pays more tax, much higher student loan repayments, has a car loan, and the nursery fees also come out of his account) but on the 'affordability' test based on salaries we got a decision in principle for much more than the house we'd like to buy! His salary is pretty good, whereas I only work part time for a charity and earn little more than minimum wage.

£200 or even £2000 would be absolutely fine as long as you're both in credit at least some of the month. Yes sorry good luck with it but be prepared to go elsewhere is all I'll say!

Halifax queried when I was just £30 overdrawn for a few days in an authorised overdraft although it was ok in the end (I had to assure them I wouldn't be going overdrawn again). Halifax also reduced the amount they would lend us by a couple of thousand down from the agreement in principle at the last minute which was a total headache as we were first time buyers and had to scrabble around for the extra.

It really does seem so mixed - sometimes they seem to be ok and sometimes not.

I've dropped the additional documents off today (including confirmation from the Council that we are on the register of electors and DH's passport so they know who he is ) with the mortgage advisor, so hopefully she can speak to the Halifax today and we can get something sorted!

OP how did your mortgage application go? I have an AIP with Natwest and branch appointment next week. Bit nervous about overdraft although it's authorised and I'm in credit for most of the month. 30% deposit asking for 4x salary.

Hi looking for some help here, have recently been accepted for a mortgage in principle, and are going to meet with our mortgage advisor to finalise the application, we have a 40,000 deposit gifted by my parents with the mortgage being 150,000 over 25 years, my other half has a good job as a maths teacher however due to a throwback from uni he lives in his overdraft each month although never goes above authorised amount, I don't have an overdraft, have roughly have about 2000 pounds in my account at the end of the month and roughly 16,000 in savings in different accounts, I am just a bit worried that due to his overdraft situation we will end up being rejected, even though I have a cushion and have offered to transfer money to him to allow him to get out of his overdraft and start to save. My mortgage advisor has says that it should not be a problem as within limits, he has never defaulted on a payment or being turned down for credit, but I am still a bit worried that we will be refused as is our dream house, any advice or people who have been in same situation would be appreciated.

It varies from lender to lender. Our first mortgage nearly got declined but eventually accepted. Our second one went through np.

Op can you update?