Bank statements are some of the most crucial document in which you will need to provide for your mortgage application. They can be the deciding factor to where or not you will get accepted for a mortgage.
When your lender received your bank statements, you can expect them to be looking for a variety of things. However, their aim is to assess whether you are the sort of individual who manages their money sensibly and is likely to keep up with their mortgage payments.
As a Mortgage Broker in Leeds, we get a lot of various queries from applicants regarding their bank statements and what lenders will try to find. Here are some of the most commonly asked questions we get asked about bank statements:
Whether you have an annual flutter on the grand national or regularly use internet betting sites, clearly there’s nothing illegal about property licensed gambling. We are well aware that many people gamble as a hobby or pastime, and there is nothing wrong with it. However, it would help if you still were careful with how much you bet, and that’s why the gambling agencies urge customers to “gamble responsibly”.
It is something to keep in mind when applying for a mortgage. A lender may be discouraged if they see that you are frequently gambling and risking losing your money. Of course, you shouldn’t let a lender tell you how to live your life and spend your money, but they do have a right to turn you away based on this factor. They also have to lend responsibly.
Suppose lenders need to prove to the regulators that they are making prudent lending decisions. In that case, it isn’t entirely unreasonable for them to expect the people they lend to adopt a similar approach when it comes to their finances. If you think that this is unfair, look at it from this perspective if you were lending your own money do you want to lend it to the applicant who gambles or the one who doesn’t?
Like we mentioned above, it’s not illegal to gamble, so it’s unlikely that the infrequent gambling transaction on your bank statements will have an impact on your mortgage application. Your lender will decide whether these transactions are reasonable and responsible. They are going to look at how often you bet, the size of the gambling transactions in your income, and the effect that gambling has upon the balance in your account. If you are dipping into an overdraft from gambling, lenders will not be too happy.
If you gamble infrequently, these transactions will make no significant difference to whether or not your lender will accept you for a mortgage. They are likely to be disregarded by your lender. On the other hand, if you are continually betting and going into your overdraft, a lender will likely see you as irresponsible and decline your application.
As a Mortgage Broker in Leeds, we know accurately what lenders look for on bank statements, and we know that you need to win their confidence. They are lending you their money after all. We never advise that you change how to spend your money, we just tell people to be accountable.
Remember, lenders are financial institutions that, either directly or as part of a wider group, often sell current accounts, overdraft facilities credit cards, and personal loans, so understand that these things can all play a role in sensible financial planning. The key for a mortgage applicant is how these facilities get administered. For example, occasionally dipping into your overdraft, as long as you don’t overuse it, is not inherently a bad thing. However, regularly exceeding the overdraft limit is not very good. Consequently, lenders will look for excess overdraft fees or returned direct debits because these would generally show that the account is not being well conducted.
Lenders will also look for large credit transactions from things such as loan agencies. Having “undisclosed” loan repayments on your record could be a problem, lenders will want to dig deep and try and find out how much you owe and how much will be going out each month. You will need to consider all of your other credit commitments before committing to another one.
Another important thing that lenders will look for bounces direct debits. In any case, this is where a company tries to take money out of your account, but you have insufficient funds so they can’t charge you. Additionally, this typically occurs when applicants forget about subscription services or memberships. So make sure that you avoid bounced direct debits in the months leading up to your mortgage application.
The most straightforward answer is to be sensible and, if possible, plan. Most lenders ask for three months’ bank statements, so if you are applying for a mortgage shortly, be wary of this.
These bank statements are going to show your salary credits and regular bill payments. So, you could even consider taking a break from gambling for a short time to make your bank statements stand out to lenders.
As a Mortgage Broker in Leeds, it’s our job to help you through the mortgage process and view your application and bank statements before submitting them to a lender. If you go directly to a lender, they may decline you straight away, and that’s why we recommend us, we might spot something that you missed; a lender wouldn’t help you out with that!
If you are a First Time Buyer in Leeds who doesn’t know a lot about the mortgage process and want to us to double-check your documents, you should get in touch and claim your free mortgage consultation. A Mortgage Advisor in Leeds will be more than happy to try and navigate you and your mortgage application in the right direction.