Does an overdraft affect your credit record adversely?

The_Ogre

The_Ogre

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I've bought a house which was recently built, but doesn't have all the things, security-wise as well as some cost saving measures, that we need. An example is our kids are are still young and I need to close the yard off; I want to add some solar panels and an inverter to offset some of my electricity usage.

My bond originator is of the opinion that I should wait until transfer goes through, because as of recently the bank will do a final credit bureau check before they approve the transfer, so I cannot take a loan right now. The k@k with that is that transfer is happening on 1 December, the day I'm moving in.

I'm reading online, but nothing conclusively applicable to our country, that an overdraft does not affect your credit record as that is an internal agreement between yourself and the bank. A revenue generating tool. I will in all likelihood pay up the OD by, at the very latest, June next year.

Does anybody have a conclusive answer on this?
 
"I want to add some solar panels and an inverter to offset some of my electricity usage." I have the money and wouldnt do this

Sounds like you need the money solar would pay back in many years to come its just not worth it in the short term. I honestly dont know what to tell you you have put yourself in some what of a predicament. A house is a black hole. Using a credit card/overdraft is not a good move at all. Dont you have some sort of savings? would use that before touching credit. these things dont come at low rates at all.

But I seriously wouldnt touch solar.

Maybe you could increase the bond amount? Might be a slightly better option.

OR... if you can cancel the purchase maybe do that and build up savings....
 
As long as the account is in good standing it won't affect your credit score negatively, in fact it will improve it. But don't max it out.
 
Snyper564 said:
"I want to add some solar panels and an inverter to offset some of my electricity usage." I have the money and wouldnt do this

Sounds like you need the money solar would pay back in many years to come its just not worth it in the short term. I honestly dont know what to tell you you have put yourself in some what of a predicament. A house is a black hole. Using a credit card/overdraft is not a good move at all. Dont you have some sort of savings? would use that before touching credit. these things dont come at low rates at all.

But I seriously wouldnt touch solar.

Maybe you could increase the bond amount? Might be a slightly better option.

OR... if you can cancel the purchase maybe do that and build up savings....
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Fsck that, the majority of my savings are for my kids and I'm not touching that. The only things I have for myself is a TFSA and RA, which I either won't cancel or I'm not allowed to anyway.

Also, how does one cancel a contract which was sealed with an OTP, to my knowledge you cannot.
 
biometrics said:
As long as the account is in good standing it won't affect your credit score negatively, in fact it will improve it. But don't max it out.
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I bank with Standard Bank and the only money of them I'm using is a 5k credit limit on my CC.

I spoke to my banker and she wants me to take out a loan - which of course would benefit her in terms of commission, so I'm trying to avoid that for now and explore using an overdraft. which I will kill in a few months because of money from an estate I'm getting.
 
Honey Badger said:
I bank with Standard Bank and the only money of them I'm using is a 5k credit limit on my CC.

I spoke to my banker and she wants me to take out a loan - which of course would benefit her in terms of commission, so I'm trying to avoid that for now and explore using an overdraft. which I will kill in a few months because of money from an estate I'm getting.
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Credit facilities aren't a bad thing. Use it when you need it.
 
It's two months. I would rather wait and increase the bond amount. It will give you a much better rate that I doubt the savings of solar will be able to offset in the meantime.
 
This is by no means my area of expertise, but i think perhaps the concern your bond originator has is to do with red flags being raised by applying for extra credit at the same time you are applying for a mortgage bond.
And/or if your mortgage bond application already has your affordability stretched to the limit these extra lines of credit could put how they view you risk-wise as being unappealing.

Having an overdraft or other loans in and of themselves wouldn't hurt your credit ratings *i think*. Just don't go rocking the boat now if you don't want to make the bank nervous.
 
The banks \ creditors in general prefer a history of you having been extended credit and then repaying it. I learned this when I applied for a home loan...I thought I was so clever all those years avoiding any kind of borrowing \ credit \ accounts (except a very old, paid-off student loan) and then when I applied for a home loan, they were like "you don't have a credit score" or some such nonsense.

As long as you're not over-leveraged and meeting your obligations, having an overdraft isn't bad.
 
Honey Badger said:
I bank with Standard Bank and the only money of them I'm using is a 5k credit limit on my CC.

I spoke to my banker and she wants me to take out a loan - which of course would benefit her in terms of commission, so I'm trying to avoid that for now and explore using an overdraft. which I will kill in a few months because of money from an estate I'm getting.
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I hope you have ucount awards... Damn you can earn a lot with your situation.
 
Honey Badger said:
I've bought a house which was recently built, but doesn't have all the things, security-wise as well as some cost saving measures, that we need. An example is our kids are are still young and I need to close the yard off; I want to add some solar panels and an inverter to offset some of my electricity usage.

My bond originator is of the opinion that I should wait until transfer goes through, because as of recently the bank will do a final credit bureau check before they approve the transfer, so I cannot take a loan right now. The k@k with that is that transfer is happening on 1 December, the day I'm moving in.

I'm reading online, but nothing conclusively applicable to our country, that an overdraft does not affect your credit record as that is an internal agreement between yourself and the bank. A revenue generating tool. I will in all likelihood pay up the OD by, at the very latest, June next year.

Does anybody have a conclusive answer on this?
Click to expand...
We resently bought. Transfer went through and we moved in 1Sept.

The attorneys that assisted us strictly advised us not to enter into any other debt like overdrafts, contracts for things like cell/car/others that have 12 or more month commitment.
I seem to recall even the bond papers had something that indicated not to.

I know you want all those things done, but really it is best to wait a bit.
Get quotes, plan order of priority. Have things arranged and run through it like a japanese speed train when the transfer is finally done.


FURTHER

If you make changes and the transfer fails for some reason you will by law, and contract, be required to reverse all the changes you affected, at YOUR EXPENSE. And that would be in your contract.
 
Venomous said:
We resently bought. Transfer went through and we moved in 1Sept.

The attorneys that assisted us strictly advised us not to enter into any other debt like overdrafts, contracts for things like cell/car/others that have 12 or more month commitment.
I seem to recall even the bond papers had something that indicated not to.

I know you want all those things done, but really it is best to wait a bit.
Get quotes, plan order of priority. Have things arranged and run through it like a japanese speed train when the transfer is finally done.


FURTHER

If you make changes and the transfer fails for some reason you will by law, and contract, be required to reverse all the changes you affected, at YOUR EXPENSE. And that would be in your contract.
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Thanks man, this, in part, is why I'm asking.

I'm half-kicking myself for not taking from the deposit to keep for doing these things because I and the wife put in all as a deposit. So we basically have nothing left except a 20k deposit for the place that we're renting now.

And, I'm aware of being in breach, the scary part is that the bank states on the contract (whatever the thing is called) that they reserve the right to reverse their decision if my financial position should change between the the date they granted the loan and the date bond registration takes place. Fscking annoying if you know you can afford it; and nobody wants to have people work in around their house during December.
 
Honey Badger said:
Thanks man, this, in part, is why I'm asking.

I'm half-kicking myself for not taking from the deposit to keep for doing these things because I and the wife put in all as a deposit. So we basically have nothing left except a 20k deposit for the place that we're renting now.

And, I'm aware of being in breach, the scary part is that the bank states on the contract (whatever the thing is called) that they reserve the right to reverse their decision if my financial position should change between the the date they granted the loan and the date bond registration takes place. Fscking annoying if you know you can afford it; and nobody wants to have people work in around their house during December.
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Have you paid all the attorney fees yet?

Cos both the bond and conveyancer require roughly equal amounts to be paid over. 2/3000 difference maybe.

The bond attorney also requested approx 50% of what is the monthly bond amount that we paid to them and they paid into the bond. Something to do with initiating the bond.
That couple of rand did reduce the bond amount by a very small bit.


Remember builders holidays start somewhere mid Dec until in Jan somewhere. So plan wisely or you could sit with half finished work over Dec holidays.

Solar can wait for sometime next year.
 
Can you not call your banker to cancel your bond whilst at the same time reapplying for a slightly higher amount to fund the necessary changes you want to make?
 
The_Mowgs said:
Can you not call your banker to cancel your bond whilst at the same time reapplying for a slightly higher amount to fund the necessary changes you want to make?
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Erm,

Having recently done the whole bond thing... No just N O.
:eek: :eek:
(I have a feeling of uncomfortable pain just reading that)

That would reset the whole sale back to stage 1.
And there could be other complications...
 
The_Mowgs said:
Can you not call your banker to cancel your bond whilst at the same time reapplying for a slightly higher amount to fund the necessary changes you want to make?
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He can probably cancel but everyone who stood to gain can then sue him. The seller can sell the place cheaper and recover the difference from him. Agents sue for commission, etc
 
No I dont mean cancel the entire thing, just his bond to reapply for a higher amount but still buying the property.
 
Do you HAVE TO add solar to your home right now? The only things I will do is make sure the house secure and safe for December. The Thieves also want Christmas...... Then again, I won't make any changes to a property if the transfer is not complete. If I was the owner of the property, I wouldn't allow it anyways.
 
The_Mowgs said:
No I dont mean cancel the entire thing, just his bond to reapply for a higher amount but still buying the property.
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No can do unfortunately. Not without negative effects. At this stage it will be better to apply for a bond after completion rather than that.
 
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