When applying for a mortgage, there’s no shying away from the fact that lenders look at bank statements! Whether it be paper based or via the new ‘open banking’ technology, your private transactions will come under scrutiny.
I’ve mentioned it many times over the years in my columns and highlighted that whatever is in your last three months bank statements, lenders have to take it into account when deciding whether to lend to you, or not.
Sadly, in the last two weeks alone, we have had to turn away 18 cases, yes 18 cases, due to the customers bank statements (even though we can do All Types of Mortgages!).
So, why would this happen? It could be that the client forgot to disclose they had a payday loan (short term funding until payday arrives). These types of loans work for some people, but most of the lenders treat them as an adverse entry. Despite what the ‘bar room adviser’ says, they don’t help towards your credit score!
Or it could be that the client forgot they exceeded their overdraft limit last month. Just a little bit, only for one day, but it’s registered. And that can mean disaster for the mortgage enquiry as it’s perceived you can’t manage your monthly finances.
What about transferring money from accounts resulting in a direct debit bouncing and being paid late? Unfortunately, this is also looked upon negatively.
And there are numerous others, which include forgetting to disclose the student loan, or a 0% interest car loan, or even the monthly payment out to your pension. Whether via bank statements, or via a credit search, the lender sees all debts and any monthly payments must be taken into account when it comes to affordability.
So, plan ahead. Work out your budgets, what your monthly payments are and anything else that you need to disclose, before you go and see your local and independent mortgage adviser. It’s time well spent and will stop any unnecessary delays, or possible declines, later on.