Overdraft And Its Influence On Mortgage Applications
Having pre-existing debts can seem like an obstacle when looking to apply for a mortgage - but it isn't necessarily a reason to be turned down for further lending!
Revolution Brokers often talk with clients who are worried about having an overdraft, and whether that will damage their chances of being approved for the mortgage they need.
In this guide, we'll discuss reasons that a lender might reject a mortgage application due to an overdraft, and what sort of factors go into making this decision.
For dedicated support with applying for a mortgage alongside an overdraft or other borrowing, give us a ring on 0330 304 3040, or drop us an email to [email protected].
I Have an Overdraft - Can I Still Get a Mortgage?
Overdrafts are a common form of occasional borrowing, and many people have an overdraft facility and successfully apply for a mortgage.
In general, an overdraft in itself isn't likely to be an issue but, of course, a lot depends on the overall picture of your credit, and how extensively you rely on an overdraft to shore up gaps in your income.
Lenders will consider several criteria when deciding whether to lend:
- Affordability - if you have a large overdraft, or seem to be struggling to keep within your available balance some of the time, it could indicate affordability issues. Affordability assessments look at your income, outgoings, and debts to determine whether you can reasonably afford to keep up with your mortgage repayments.
- Agreed Overdrafts - where you have an approved overdraft facility and use it from time to time, this is unlikely to have a significant impact on your mortgage application.
A mortgage provider will consider how often you use your overdraft, to what extent, whether you have multiple overdraft accounts, and whether you have been charged for using an unauthorised overdraft facility.
