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AIBU?

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Original poster

Mortgage application question AIBU

22 replies

JackieWeaversLaptop · 01/04/2022 12:45

AIBU to ask what mortgage lenders typically look for when they assess bank statements? (Posting for traffic - sorry!)

DP and I are hoping to apply for a mortgage soon (first-time buyers), so would be helpful to have any advice on mortgage application prep!

I understand the lender is generally checking if the applicant can manage their money well (so things like: is the overdraft used, are there any odd transactions or evidence of gambling etc).

As I’ve never applied for a mortgage before, just wondering if there’s anything else important we’ve missed? Our bank statements are good for all of the above checks, but just wondered if there’s anything else mortgage lenders look for that we should be aware of?

Thanks!

OP posts:
Movingonup22 · 01/04/2022 12:46

They also look for normal outgoings I think - Ie not just checking what you were saying but also look at what you spend on groceries, standing debits etc

Duracellbunnywannabe · 01/04/2022 12:56

They are checking you can afford the pay the mortgage and all your other commitments.

WhenDovesFly · 01/04/2022 13:04

Yep, checking your outgoings and whether you're managing to stay out of overdraft each month. Also checking that there is a regular salary going in that matches what you've said you're earning. Maybe also checking no other mortgage payments going out.

Years ago, when my DH and I were moving, we had a financial adviser who helped with our mortgage application and got us a brilliant deal. Turns out she'd lied and said we were first time buyers. When our bank statements revealed we were already paying a mortgage, our application was thrown out.

Original poster
JackieWeaversLaptop · 01/04/2022 13:30

Thanks so much all!

Oh gosh that’s awful Doves, really sorry to hear it! That’s a horrible experience. What happened in the end? Did you manage to reapply for a mortgage okay?

I was just wondering as well about what happens when mortgage applicants have several current bank accounts. I have a couple that I use: I get my salary paid into my main one each month, then I transfer some of the salary into my Monzo account. I’m assuming the lender will ask to see statements for my Monzo account, as well as my main account? Also, does anyone know if the lender will ask to see credit card statements too? (I pay my credit card off monthly).

Thank you!

OP posts:
D0lphine · 01/04/2022 13:41

When I was a first time buyer I called Land and Country mortgages and they helped a lot!

Really tricky to know what you're doing esp as I was buying alone!

I think the main thing they look at is:
-take home pay for both of you, along with any other income
-debts like credit cards / car finance and your monthly payments
-your dependants and childcare payments
-whether the mortgage is affordable given your lifestyle
-credit score, especially things like missed payments in the last few years. You can check yours with the three main agencies online, it's pretty straightforward
-your job (some are considered lower risk that others)

Namechangehereandnow · 01/04/2022 13:44

Is there something in particular you’re worried about OP?

tealandteal · 01/04/2022 13:50

Ours wanted last three payslips from both of us, and to know details of whether we were permanently employed/FTC and things like that. They look at what you are committed to spending each month so things like car loans, we paid a childcare bill each month etc.

Ozanj · 01/04/2022 13:55

On top of all the usual checks, They will perform financial crime checks, to make sure you’re not receiving funds from a sanctioned country / USA / foreign country. If you make regular large payments oversees they may want you to prove they aren’t for a loan / mortgage.

They will also want to see that you have saved the deposit yourself & if not will ask for the name of the person who provided the funds and may require a letter from them that it’s a gift and not a loan.

mindutopia · 01/04/2022 13:58

Yes, they'll want to see statements from all your accounts. We had to provide both personal and joint current and savings, any investment accounts, and also dh's business account statements.

blobby10 · 01/04/2022 14:40

In my experience it depends on the LTV that you're borrowing. When I split with my H, he was going to pay the mortgage but the mortgage company wouldn't accept this and had to do an affordability check on my finances alone. They went through my bank statements with a fine toothcomb asking what various payments were and if I would be able to cancel them if the mortgage rate went up.

When I downsized and got a new mortgage last year with a 60% LTV they didn't even check beyond seeing what account my salary went into.

Original poster
JackieWeaversLaptop · 01/04/2022 15:47

This is all really helpful, thank you!

Namechangehereandnow - I think I’m just worried about being turned down for a mortgage and then having to think about reapplying (mainly because I’ve never had a mortgage before).

Both DP and I work full-time in the public sector, and have been in our jobs/the sector for several years now. We have decent credit scores and credit history, but I’ve just got general anxiety about being turned down because of something silly I’ve overlooked.

Is there anything I should avoid doing/focus on doing to make sure my and DP’s bank statements look good in the months leading up to applying? (E.g. is there anything generally we should cut back on; any spending habits I should change?) I probably spend most on food, out of everything (shopping/takeaways/eating out), but it’s not excessive and I’m never in my overdraft or anything.

I move money between my Monzo pots and my main bank account (where my salary is paid in) to make sure I have enough each month.

OP posts:
PineappleRingo · 01/04/2022 17:53

Who is doing your mortgage application?

They should be checking them before sending off. They want the mortgage to go through as much as you

They will want to see all bank statements and credit card statements too if you pay a monthly amount to one

xXwhenwillitendXx · 01/04/2022 18:03

Partner and I have just had a mortgage offer. We are fost time buyers with only 5% deposit, partners credit score wasn't ideal.
I thought we never stood a chance but we used L&C mortgage brokers and the offer was given last week.
There isn't really much you can prepare for believe me. They will ask for anything they need, quite often about three times 🤣.
We started by doing a budget planner for the mortgage advisors including bills, council tax, car spending, food shops, childcare etc. Then we had to send 3 months bank statements, p60, and three months of pay slips. Then they came back and asked for a receipt of a recent sale, and proof of child benifit, then they wanted a further bank statement.
I'm not going to lie, it's very very stressful so my only advice is to be organised.
Oh and sign up to checkmyfile, it gives a free trial period (so remember to cancel) and that's a very indepth credit report so you will see anything before you even apply.
Good look and just message me if you want any more help, or just someone to rant at Grin

BuanoKubiamVej · 01/04/2022 18:06

The aren't just checking that you can afford the mortgage. They are checking whether you will still be able to afford the mortgage in 4 years time by which point interest rates could be 8%. Evidence of a big chunk of money going into a savings account every month is what is basically needed. Show them that you have way more money than you need.

Onlyforcake · 01/04/2022 18:10

They check for anything to suggest undeclared borrowing (eg from family), to check there is no suggestion of money laundering (obviously the bank are also obliged to check suspicious activity like that anyway), they check that your outgoings match up with what you've put on a budget (that it's not a complete guesswork).

Original poster
JackieWeaversLaptop · 04/04/2022 23:03

Thanks so much for your advice, everyone.

Just jumping in with one more question.

Any advice about spending habits on my/DP’s bank statements, please?

I have a budget, and manage to get all my costs covered within that (essential things like rent, transport and phone bill, and food shopping, as well as money for ‘treats’). I don’t spend much money on things like shopping and going out - I’d say most of my ‘treat’ money is spent on things like going to restaurants or takeaways. It’s not extreme or anything, and it’s all well within my budget.

I just wondered how this is all likely to be viewed by mortgage lenders though? Do you have any suggestions for if I should cut back on spending before applying for a mortgage?

Thanks.

OP posts:
millytint44 · 04/04/2022 23:17

Use your main current account for salary and main outgoings. Get like a Starling account for your fun money and treats. Pay a set amount into that each month.

Paddingtonthebear · 04/04/2022 23:21

Use a good mortgage broker. We did and it was so simple. We provided them with 6 months worth of bank statements (all accounts) and wage slips and a list of our outgoings and he sorted the rest.

Abitofalark · 04/04/2022 23:26

@D0lphine

When I was a first time buyer I called Land and Country mortgages and they helped a lot!

Really tricky to know what you're doing esp as I was buying alone!

I think the main thing they look at is:
-take home pay for both of you, along with any other income
-debts like credit cards / car finance and your monthly payments
-your dependants and childcare payments
-whether the mortgage is affordable given your lifestyle
-credit score, especially things like missed payments in the last few years. You can check yours with the three main agencies online, it's pretty straightforward
-your job (some are considered lower risk that others)

Do you mean London and Country? I've used them in the past and took out a mortgage through them.
CornishSeaSwim · 05/04/2022 09:05

I would echo previous posters and suggest getting a mortgage broker. That's what we did and she got us a great deal, took a lot of the stress out of applying too. We had to submit bank statements and credit card info, can't remember if there was much more than that. This was for a 90% mortgage too. No question of how we got the deposit or anything like that and we didn't have much in terms of savings either.

This was almost 5 years ago and we are soon coming up for renewal, so will definitely go back to her again. I do think things have become stricter, but it sounds like you've got everything covered! Exciting times!

DidymusAmbrosius · 05/04/2022 09:09

I also used L&C and found the whole process so pain free. It cost me nothing, they found the best deal and did all the application for me.

Really worth it and I would do the same again in a heartbeat.

Original poster
JackieWeaversLaptop · 05/04/2022 09:27

Thanks so much everyone, this is really helpful. I think we probably will use a broker, as it does seem to make sense. Thanks again.

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