During your mortgage process, you will need to provide evidentially documentation to prove that you can afford your mortgage repayments. The documents that you’ll be asked to provide, include bank statements, proof of address, latest P60, payslips and photographic ID.
Lenders need to be certain that you are financially stable to afford your monthly repayments. If given an Agreement in Principle this will signify that you have been agreed in principle you providing substantial documentation to back up everything that you’ve said about yourself.
Your bank statements can say a lot about a person, they highlight your latest spending habits like the commonness of going to the pub, making gambling transactions, going shopping on a betting app. Everything transaction, even bank transfers to and from different accounts will need to be shown.
The lender needs to know whether they are lending to dependable applicants or not. For example, if the lender can see that an applicant spends too much money or exceeds their arranged 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 lenders not want to crop up on my bank statements during your mortgage application?
The first thing your lender will look for on your bank statements is any gambling transactions.
Gambling transactions are 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.
Don’t worry, the occasional gambling will be harmless. That said, if you are continually gambling enormous quantities of money, you will not be in the lender’s favour and you may be seen as irresponsible.
This is because lenders need to trust you and know that you will be able to meet your repayments on time.
Lenders need to know that you can afford a mortgage, so going in and out of your overdraft and reaching its limit every month is something that lenders won’t take lightly.
That said, there is nothing wrong with going into your overdraft, we have seen it happen with different applicants all the time. But if you have to do this every month, it might stop you from getting accepted.
Be aware that lenders will look out for any bounced direct debits. A bounced direct debit is when a company tries to take money from your account through direct debit, but your account doesn’t have the necessary funds to cover the bill, this usually occurs with monthly bills/subscriptions.
Whether this is a complete accident but if you accidentally missed a mortgage payment, this will be more detrimental than missing a Netflix subscription. But having repeated bounced direct debits will reflect badly on your credit file, so be wary in the future.
Lenders will be making a note to check for any personal loans and credit card commitments. You need to make sure to declare any expenditures and that you will still be able to meet your mortgage payments on time with these expenditures.
Here at Yorkmoneyman, we have worked with many First Time Buyers and Home Movers in York. We tend to find that most lenders will ask for at least three months worth of bank statements from their applicants.
Now, you can’t alter what your past bank statements show, but you can change what appears on them in the future. Before you decide to submit your final mortgage application, you need to get prepared and be mortgage ready so your finances mirror you in the right way. Here are some of our recommendations:
If you need help with making your application stand out, book your free mortgage appointment today with one of our expert Specialist Mortgage Advice in York. We have worked in the industry for over 20 years and helped many First Time Buyers in York achieve their mortgage goals.
We are confident to say that we know exactly how to help. You could be next, so if you have any mortgage questions, we have likely helped many applicants in your situation before.