to be pissed off that mortgage lender wants me to explain my transactions?

[TiaMariaandSpringCleaning]

Im about to move mortgage providers. Have a very good credit history, no bad debts, good equity etc - ie not a high risk borrower or anything. The new lender has written to ask me and DH to provide bank statements with written explanations for any transaction over £250 (in or out).

I cant fathom what possible reason they have to require this information, does anyone know? WIBU to explain my transactions as "buying jelly beans" (£320), "putting tenners down a drain for the hell of it" (£400), giant sex toys (£260) and so on? Can they refuse to lend to be because of an excessive jelly bean addiction? Or is there a good reason for this that I dont appreciate?

Oh god sorry about the multiple post bloody iphone app

Spot on Moreisnnogedag

TiaMaria - a lot of banks have been stung by their inappropriate lending practices (hence credit crunch) which is why they have tightened up on who they lend to and the process around getting a mortgage. In the past some banks were lending 100% of the value of the property which was clearly high risk.

The key criteria with this is affordability - i.e. they are testing your ability to be able to afford the mortgage payments (including if they go up due to interest rate rises)

I dont get it either, they have done a credit check, it's fine, and we provided a list of loans (one cad payment and credit cards that get paid in full every month) at the time we applied. It's an of seeing mortgage too, so they already know we have good savings!

I'll give them the real boring explanations I suppose, but im still confused as to why they are needed!

Market intelligence. They want to sell your details to interested companies , that's why.If they know you regularly spend money on weekend breaks or lots of techy gadgets (for example) then you are a good lead to sell on to appropriate companies.

See that's the thing though. Besides our rent and our ridiculous gas/elec bill (bloody aga), I don't have a single transaction over £250 apart from transfers to our joint account. However, I did have to provide a list of standard outgoings to ensure we could absorb the additional mortgage cost.

Coco if a lender did that they would be in serous breach of data protection regulations and could lose their regulatory status. That won't be the reason.

Our previous lender was happy to lend 10x my DH salary, with no evidence of his earnings. Baffling really. No wonder they went bust soon after. In fact, we had done our calculations and it was affordable (on a temporary basis, as we planned), but lender didn't really know that.

On that basis, I'd commend a lender for wanting to know how your money is spent. It occurs to me that admitting that some of your money is frittered on treats isn't such a bad thing, as it suggests you have some luxuries you could restrict, if necessary. If all your money goes on groceries and utility bills, then where do you cut corners?

10x salary with no evidence! That is crazy No wonder they went bust!

It's all about 'knowing your customer'.
If you've applied to a smaller lender chances are their rates are more attractive but their lending rules are a lot tighter.
The credit check only gives a snap shot how your finances are.

They are probably ensuring that you don't have any loans that you haven't declared and aren't showing on your credit check or taking out payday loans to get you through the end of the month.

Mortgages these days are worked out on affordability rather than multiples of your income and they need to check how you manage your finances and whether it would potentially affect repaying their money.

IME a request for a bank statement is pretty standard these days, explanations for large transactions not so much. But if you want their mortgage then I'm afraid you'll have to do as they ask.

If they really want to see if you can afford what you are borrowing they should request your account activity from your bank and run an analysis on it (ie strip out your current housing payments, add your mortgage payment plus housing costs and see what your headroom is with regards to interest rate changes).

I would call back and speak to a supervisor about this. I fail to see how this exercise provides comfort that you will be able to afford the mortgage. If they don't want to provide you with a mortgage they should have the balls to tell you so and not come up with asking you about transactions for more than GBP250.

My typing is awful, sorry! Its a car payment, not cad, and an off setting mortgage!

I do get them needing to check I can pay the loan, but again, I'd have thought a bank statement on its own should be sufficient, it shows my soending habits (but only in a short time period, which may or may not be typical for me) it's the written explanationem requested in advance, I dont understand. Most transactions are self explanatory anyway (eg the rates debit says Rates), but if I have a healthy balance throughout the period, have good credit rating and decent savings, what does it matter what I used a £250 cash withdrawal for, for examle?

Yup!

Tiamaria can I ask who the lender is? And was this information requested when you first submitted the application or has it cropped up later on down the line?

We had to do this when we remortgaged. It was so they could check if we had any regular commitments not covered by loans/directs debits to assess affordability. For example I'd paid for an OU module that month and they wanted to know how often I had to pay as clearly there would be a big difference to affordability if I was paying that amount (£700+) every month compared to paying it once a year.

I wouldn't want to provide this but as others have said would if I really wanted to go with the lender if suck it up I
Guess.
Thing is my current account is really only for bills so money is frequently transferred in and out and there is never any excess cash in it - that goes into various saving pots and my "spending" money goes into another current account so the whole thing would be extremely confusing and tell them nothing. I also use my ( small) overdraft as it's free rather than my savings which could look like I can't afford my living expenses.

Of course the lender would just reject if they didn't like it without listening to explanations but it seems unfair.

Can I name them here? Dont want to get in trouble! Its a fairly small builing society, in England, online only accounts as far as I know. The points above re smaller lenders having good rates but tougher rules make sense, perhaps that's it.

They Have given the initial offer in principle when I applied, this is their first communication after that. Everything else they have asked for is very reasonable (they only want one pay slip and confirmation of some personal details) nothing to indicate a problem, seems like a standard letter.

Money laundering!

I think the consensus thst Iwbu to refer to sex toys and jellybeans is fair but it would be fun!, you've all been really helpful, and I guess I'll have to suck it up and give them what they want, I guess it is the price we pay for more responsible lending! :) thank you all

I thought it was to do with money laundering. We had to show them how we had saved for our deposit when we got our mortgage. Our solicitor said it was to prevent money laundering and the solicitors could be fined if they didn't check. In Scotland though so maybe different.

Incoming payments >£250: needed for money laundering regulations I think, apparently there is a problem with people using money obtained from dodgy practices to buy houses and 'clear' it in that way. I was asked where the money was coming from for my deposit. This is understandable as other than income from employment, how are they supposed to know that you aren't getting money from drugs/arms dealing?

Outgoing payments: to check for regular financial commitments (e.g. in my case childcare payments which are more than my monthly mortgage payment ffs, in other cases there may be loans being repaid, child maintenance, car finance etc etc) which affect net income thus ability to cover mortgage payments. Though they seem to be doing it in a very clunky way if they are asking you to explain each one rather than just saying 'do you have any regular financial commitments?'- probably because it's a good rate they want to be more stringent.

They aren't obliged to lend you money after all, so it's a bit silly to wind them up unless you are just applying for a mortgage for the fun of it.

Ah foodtech you beat me to it.

That's barking mad. Apart from mortgage payments our statement has three payments over £250 most months. They are my credit card and DHs cards.

Each containing miriad small transactions upto about £110 for a bad grocery bill.

The only payments over £250 are for servicing and Moting cars that needed new tyres.

That really is exciting zzzzz

Seems a bit bonkers as you might buy a new laptop,sofa or pay for a course or a weekend break costing over £250 when feeling flush and then scale right back. Likewise one month you might do an online grocery shop over £250 quite easily and then the next shop using cash weekly.

If you purchase from bright house or a dodgy HP company or have lots of stuff in the pawn shop it wouldn't show up at all as your payments would be under £250.

The black economy works on cash anyway so wouldn't catch miscreants. For incoming payments, so many people do a bit of freelance or overtime when the opportunity arises that it's a job for the tax man not the mortgage lender. Likewise many close extended families seem to have a "pot" that goes round as different members hit hard times and then pull themselves out of it, till in the end noone remembers who the original "pot" belonged to.

Also how many months bank statements do they want?

Unless they ask for a whole years it doesn't tell them that much.

I don't have car or house insurance on
DD nor AA membership. Cars only need one annual service and tend to take only one expensive holiday.

DDs lap top has died, if it can't be repaired that's a really big bill (I've a horrid feeling it's a £500 one) that won't be on the ones they have seen.