Part of the mortgage process includes providing evidential documents to prove that you can afford a mortgage and you are who you say that you are. There are lots of different documents that you’ll be asked to provide, this includes photographic ID, payslips, latest P60, proof of address and your bank statements.
Lenders need to be certain that you can afford a mortgage. Yes, you may have been given an Agreement in Principle (AIP) to say that they are willing to lend to you, however, you are only agreed in principle of you providing evidential documents to back up everything that you’ve said about yourself.
Bank statements show a lot about an applicant, they will show your latest spending at the pub to gambling transactions on your go-to betting app. Everything you spend will be on them, even bank transfers to and from different accounts.
Seeing how someone spends their money will show the lender whether the applicant is a trustworthy applicant or not. For example, if the lender can clearly see that an applicant spending too much money and is exceeding their overdraft limit every month, they will question whether you will be able to afford a mortgage or not.
It’s all down to risk. If the lender thinks that you are going to struggle with your mortgage payments due to how you spend your money, they are unlikely to accept your application.
The question is, what exactly are they looking for? What do I not want to pop up on my bank statements during my mortgage application?
Gambling transactions is actually one of the first things that your lender will look for on your bank statements. Believe it or not, depending on how frequently and how much money you gamble, gambling can affect your chances of getting a mortgage.
Occasional gambling will be harmless, however, if you are frequently gambling large amounts of money, no matter if you are returning a profit or not, lenders will not be impressed.
Remember, lenders need to trust you and know that you’ll be able to meet your mortgage payments each month. If you are gambling, you may be seen as unreliable.
Lenders need to know that you can afford a mortgage, so dipping into your overdraft and exceeding its limit every month is something that they won’t take lightly. We aren’t saying to never step into your overdraft, as a Mortgage Broker in Newcastle, we see it happen all of the time. We are suggesting that if you do it every month, it may be a little trickier to get accepted.
Another thing that lenders will look for on your bank statements is bounced direct debits. A bounced direct debit is a payment that fails to go out of your account, this usually occurs with monthly bills/subscriptions. This may sometimes be a complete accident, so one or two may not hurt depending on what you are paying for, for example, a missed mortgage payment will more detrimental effect than a missed phone contract payment. However, repeated bounced direct debits will reflect badly on your credit file, so be wary of agreeing to credit commitments when you can’t really afford them.
Furthermore, lenders will be checking for personal loans and credit card commitments. They need to make sure that you’ve declared these expenditures and that you’ll still be able to meet your mortgage payments as well as these outgoings.
After having worked with thousands of First Time Buyers in Newcastle and Home Movers in Newcastle, we have learnt that most lenders will want to see at least three months worth of bank statements from their applicants.
In light of this, you now know that you can’t change what your past bank statements show, however, you can change what appears on them in the future. Before you officially submit your final mortgage application, you should get prepared and make sure that your finances reflect you in the right way.
As a Mortgage Broker in Newcastle, here are some recommendations that we have to show that you are a reliable applicant:
For help with making your application stand out, you should get in touch with a broker like us for Specialist Mortgage Advice in Newcastle. We have been helping people achieve their mortgage needs for the last twenty years, it’s safe to say we know exactly how to help. You could be next!
We also offer a free mortgage consultation, so if you have any mortgage questions, it’s likely that we’ve helped many applicants in your situation before, so feel free to get in touch.