Want to apply for mortgage but bank statements are shocking!

[Shnazzyshot]

Hi we are trying to get a mortgage and have been in touch with a mortgage advisor. We haven't been actively been saving. The moment we have in the bank is just what's 'left over'. I hope that makes sense. We aren't on a high income by the way but we don't have any debts or finance, sky packages and we haven't ever been on holiday. We live in the north east so our living costs are lower.

Anyway. Because we haven't been actively saving or planning for a mortgage, our bank statements have loads and loads of little transactions for coffees, take aways and other little things. I'm talking every day. We spend about £100 on junk basically a week. (yes I know I'm so ashamed) we went through our statements the other day and have stopped all spending but obviously we can't change our previous statements which look awful. We can afford all these things by the way it's not like we are spending money we don't have and we are still always up at the end of the month.

Anyway we've seen a house we want to buy so my question is have we got any chance of getting a mortgage now or should we wait 3 months to have squeaky clean bank statements but risk loosing the house?

I've spoken to a mortgage advisor and when he asked when we spent each week on treats, I said £50 but it's actually like £100. I didn't lie on purpose I just didn't realise it was so much. Obviously we know we can just cut this spending but I'm worried the mortgage company won't view it like this. Mortgage advisor is ringing us back today so I will tell him the correct figure.

Please don't be too harsh!

Thank you.

[SadSongsAndWaltzes]

I wouldn't think it would be a problem. When we applied recently they asked about fixed regular costs, like childcare, gym and club memberships, etc., but didn't ask specifically about spending money. I'm sure they'll see it and realise that these are optional extras. Why wouldn't you spend your money? It's not obligatory to save it or make large purchases, it's yours to do what you like with as long as you stay within your means, which it sounds like you do. I wouldn't worry, good luck!

[MrsArchchancellorRidcully]

We've just done this. The bank were interested in regular intents, direct debits etc. Things we can't get out of paying. The treats etc all mean that's disposable income that is going spare to spend on the mortgage. Before we increased the mortgage we had more disposable income. We do have savings too but they didn't ask about that. Hope it goes well.

[Bearbehind]

Spending on things like coffee etc shouldn't be too much of a problem as that can be cut out.

More of an issue are things like gambling (less easy to stop) or high childcare costs which are committed spending.

If you haven't been saving do you have a deposit or funds for legal fees etc?

That's sounds like a bigger issue to me.

[Shnazzyshot]

Thank you! I keep reading articles about 'that daily coffee might stop you getting that mortgage' and scaring myself.

Our direct debits are very low. We don't have any child care costs. I think our only 'extras' are pet insurance and Netflix!

I just don't want to mess up our chances.

[Bluntness100]

I don't think this is an issue. They look at income, debt, and bills etc.never occurred to me to think about what else I spend money on and I happily provided them, there was no issue. However we did not use a mortgage advisor, we simply went with the mortgage provider and they did not ask how much we spent on treats.

[2014newme]

Have you the deposit saved? I assume so as £100 on coffee and takeaway would go a long way to a deposit

[Shnazzyshot]

Yes we've got a deposit and extra for solicitor fees survey ect.

[Bluntness100]

I would also agree the bigger issue is do you have a deposit, do you have enough to pay the fees etc?

[Bluntness100]

Cross post them you're fine. No one was ever refused a mortgage because they buy too many coffees...

[WhatwouldOliviaPopedo]

My bank statements were like yours but we've just got a mortgage without any additional questioning of our expenditure. I'm also self-employed. Ours looked at overall affordability, size of deposit etc. Definitely use a broker though - much easier.

[Bearbehind]

Is the deposit from money you've saved or a gift?

If it's the former it shouldn't be a problem, if it's the latter it might be.

[Bobbiepin]

It sounds as though you'll be fine but have you considered whether you will be able to afford your repayments if the interest rates go up?

[Shnazzyshot]

£1k was a gift. The rest is from us. Yes we can afford the repayments if the interest went up.

We would be a lot better off if we moved as it would be so much easier to find a job with more hours.

We've got a broker. Just waiting for them to call back today.

Thanks for all your reply so far

[Bearbehind]

Good luck then!

Honestly, don't panic about some of the nonsense you read in the papers.

All lenders are bothered about is that you can afford the mortgage.

They know you can give up frivolous spending if need be.

[LazaUbi]

Like others have said they are only interested in essential, recurring expenses and financial commitments, not discretionary spend because you would obviously choose paying your mortgage over coffee if money got tight for some reason.

Some lenders don't even ask to see the bank statements, just payslips and ask you questions.

[jbee1979]

I was a mortgage underwriter in a previous life. They will look for red flags like DDs for undisclosed personal loans, or betting websites, things like that, not how you swipe your card for McDonald's breakfasts 5 days a week :-) good luck, I'm sure they're not as bad as you think!

[Briette]

You'll be fine, I've had no trouble getting and rearranging mortgages and my statements are a complete mess! A difference of £50 between an estimate and reality is also nothing to worry about so long as you're living within your means and not massively lying. Enjoy your coffees and may the inevitably lengthy mortgage organisation process pass by swiftly so you can get on with the more interesting stuff!

[c3pu]

If you stop frittering the money away on coffee etc now, by the time you actually get through the palava of viewing properties, finding one you like, having an offer accepted and actually applying for the mortgage...

Chances are your statements will look a lot cleaner! Nothing moves quickly when it comes to buying a house.

[Shnazzyshot]

Thank you so much! I'm still hugely embarrassed but you've all made me feel so much better!

[Shnazzyshot]

And yes we've stopped all the needless spending so at least the last few weeks of bank statements we submit will look much better!

[Shnazzyshot]

Briette, that £50 difference is a week. So I was out by £200 a month cringe!

[FruitBadger]

I'm an ex Underwriter and latterly Mortgage Adviser. jbee1979 is correct the red flags are undisclosed financial commitments (loans, credit cards for example), returned / unpaid DDs and exceeding your overdraft limit. Using an agreed overdraft is fine.

An Underwriter wants to see that you're not already living beyond your means, spending spare money now on "treats" isn't a problem if you can afford it, there is an expectation & understanding that when you move up the ladder you tighten your belt.

[Needmoresleep]

A good reason not to play Candy Crush! I was applying for a BTL mortgage in my own name and had to provide statements from a small account that I have in my sole name. All the things that I don't want to show up on the joint account. Very but it means I am now more careful about frittering.

[Shnazzyshot]

Thanks fruit. Thankfully we don't have any of that. I don't have an overdraft and DH hasn't ever used his. No undisclosed financial commitments.

We've decided on no spending at all from now on. I'm so relieved!