Mortgage & overdraft

[SnowBells]

I posted this in 'Property', too… but just in case:

DH & I have separate accounts. There was a period in the last six months where he was in overdraft (we had to move flats unexpectedly due to last one being sold by the landlord and also had pre-arranged holidays). I should have paid his overdraft as I had enough in investments, as well as in my account, but as we knew that a bonus was coming in within a matter of a couple of months, we just let it be. It was also well within his agreed overdraft limit. He is well out of it now. And I currently have a lot of cash in my account (in addition to deposit held in a different account, etc.), and we're hoping we will never make use of that overdraft facility again.

Also - please bear in mind, DH doesn't even have credit cards (I do). So the overdraft is really the only time he borrowed money.

Will this affect a mortgage application???

I wouldn't think so. They're more bothered about current debts and payment history, ie missed payments.

The banks do seem to be very funny at the moment but being within an agreed overdraft temporarily shouldn't be an issue.

Was it authorised? I wouldn't expect it to be an issue unless you're applying for an extremely high level of borrowing vs either income or house.

Do be aware that new legislation coming in requires lenders to ask lots of questions to determine capability to repay whereas previously it was predominantly salary based. Some lenders have introduced this already.

I don't think they'll ask how much cash you hold. They are likely to ask about use of overdraft, credit card bills, living costs (shopping, utilities etc) and and standard outgoing costs (e.g. childcare, loan servicing).

I will admit I found its bit daft that we had to go through all of this to request a loan that wasn't 3 times my salary much less joint, but I can understand (some of) the rationale.

Thanks. I hope not! No missed payments with credit cards. Last ones on my side was nearly 6 years ago - we went on holidays, didn't set up automatic payments and no internet where we went!!!

Will talk to mortgage advisor next week. We did get an AIP, but you never know...

BuggersMuddle Yes, it was authorised. I really do hope it will be OK.

Re. credit cards - one will be completely paid off before we even have the mortgage to think about (which shall be at the end of this year).

We also have life insurances privately and via companies - to the point that any mortgage would be gone in the worst case scenario...