Believe it or not, your bank statements are some of the most important documents that you will need to provide for your mortgage application. They can be the deciding factor to whether or not you’ll be accepted for a mortgage.
When you give your lender your bank statements, you can expect them to look for a variety of things. However, their primary objective is to assess whether you are the sort of person who manages their money responsibly and is likely to keep up with their mortgage payments.
As a Mortgage Broker in Cambridge, we get a lot of different questions from applicants regarding their bank statements and what lenders will look for. Although, one question stands out the most: “Do gambling transactions look bad on my bank statements?”. Here are some of the most common 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 is nothing illegal about property licensed gambling. We are aware that a lot of people gamble as a hobby or pastime and there is nothing wrong with it. However, you still need to be careful with how much you gamble and that’s why the gambling agencies urge customers to “gamble responsibly”.
This is something to keep in mind when applying for a mortgage. A lender may be put off 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 a duty to lend responsibly.
If lenders need to prove to the regulators that they are making prudent lending decisions, it isn’t entirely unreasonable of them to expect the people they lend to adopt a similar approach when it comes to their personal finances. If you think that this is unfair, just think about it… If you were lending your own money would you 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 very unlikely that the occasional gambling transaction on your bank statements will impact your mortgage application. Your lender will determine whether these transactions are reasonable and responsible. They are going to look at how often you gamble, the size of the gambling transactions in relation to your income and the impact that gambling has upon your account balance. If you are dipping into overdrafts 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 constantly betting and going into your overdraft, it’s likely that a lender will see you as irresponsible and decline your application.
As a Mortgage Broker in Cambridge, we know exactly what lenders look for on bank statements and we know that you need to earn their trust. They are lending you their money after all. We never advise that you change how you spend your money, we just tell people to be responsible.
Your lender will examine everything on your bank statements, but what are they mainly looking for?
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 part in prudent financial planning. The key for a mortgage applicant is how these facilities are managed. 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 so good. Thus, lenders will look for excess overdraft fees or returned direct debits because these would normally 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 is bounced direct debits. This is where a company tries to take money out of your account but you have insufficient funds so they can’t charge you. This usually happens 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 simple answer is to be sensible and, if possible, plan ahead. Most lenders ask for three months’ bank statements, so if you are applying for a mortgage in the near future, 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 Cambridge, 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 that you get a second pair of eyes on your application. We might spot something that you missed; a lender wouldn’t help you out with that!
If you are a First Time Buyer in Cambridge 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 Cambridge will be more than happy to try and steer you and your mortgage application in the right direction.