me and my girlfriend have just recently sold our first house which we had for four years and lookin for another, we have a mortage with halifax and that will come to an end so was wondering if any finanical people can help us here. we are hoping we could go for a house about 150000 mark with 20000 deposit so that would take us down to 130000 BUT I have a 4000 overdraft up to max and 4000 left on a loan but the girl has perfect rating does anyone know if we could get a mortage for that due to my poor credit rating

Hi there, I'm not a financial professional, but I have some observations/advice from my experience.

I've been told that an overdraft is not viewed the same as a loan or credit card, but can be regarded as the worst form of credit, and it was recommended that I do not use my overdraft as it reflects that I can not manage my money.

It is better for your credit rating to use your credit card and pay it, than to use your overdraft facility.

A question would be - Have you checked your credit rating on Experian or Equifax or are you assuming it is not good? Just having no debt does not equal perfect credit rating, and often not having credit cards or agreements that you can be seen to honour gives you a lower score.

Your loan should be fine for the mortgage applicaiton (as long as you have been paying it and it is affordable), all that will happen is that it will be deducted from the amount of money that you could potentially borrow.

I would personally pay off the overdraft with some of the deposit, leaving you with 16K.

This would leave you with needing 134K, which is still a 90% or less mortgage. It makes little difference to the deals available (on the 90%, 80%, 75% etc) that you don't have 20K.

What it can make a difference on is how much you can borrow.

If you need a 134K mortgage based on a multiple lending ratio of 2.5 : 1 (Multiples of your joint income), you would need to have a joint income of 54K a year.

Given the 4K loan remaining you would need this to be 55,200 a year for a lending of 138K (debt capacity) - 4K loan leaving a mortgage capacity of 134K

You should use the mortgage comparison tools to see what the mortgages are available for this (there are some available).

With some mortgages it is possible to port the mortgage to a new home, so it is worth contacting the Halifax to see if they would be able to do this. This can be a quicker and less painful approach. Don't forget to ask about the cost of additional lending (if the new mortgage is greater than the previous one) as it might be higher, and also about the fees (to port, or to apply for the new mortgage or additional lending).

Good luck with it all.

BTW paying your mortgage for 4 years should look good on your credit record so chin up! :)

Sparky

cheers sparky

just that girlfriend does not know about it. i know i should tell her..

thanks tho..

Yes you should tell her - honesty is the best policy in a relationship and it will avoid potential arguements later on. If you're serious about each other then you need to find joint ways out of problems together. Also as you're related financially (you imply you've got a joint mortgage) she's directly affected by your credit history / rating (any search on her will also include you) so has a right to know about it.

No problem.

I know that there are lots of ways of ending up in debt that you don't necessarily want to admit to your girlfriend or anyone else, but now is the opportune time to do it. Like tt lady says honesty is the best policy.

It would be much better for you to tell her and talk about how to get the best mortgage and how to even out / repay the extra before it comes out from the solicitor, mortgage company, bank statement etc etc.

One final thought... the difference to you of not having a massive overdraft and only having to pay back the loan (plus any adjustments to your gf / the mortgage) as well as worrying about your gf finding out will be huge. It will be a massive difference to how you feel - a big weight will be lifted.

Time to bite the bullet and come clean.

Good luck.

Sparky