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Original poster

Can a mortgage be declined due to too much spending?

49 replies

Melissa85 · 25/08/2020 21:22

Hi everyone,

Advice please. We have had an agreement in principle for a help to buy mortgage. We have been approved on the mortgage in principle with our wages and deposit for house credit checks etc...

We secured the house and now they have asked for 6 months bank statements and my spending is SHOCKING. I always pay bills and put into savings every month but end up spending the rest on just little things. The past 3 months are the worst as we are expecting a baby in 6 weeks and I have been spending so much preparing for her right down to the £0 mark before I get paid again. All it shows is 'boots' 'next' etc one after the other loads of amazon too.

Worried they will now refuse us because of this out of control spending. My partner is pretty good it's me!

Does anyone know if this is will have an affect on it ?

OP posts:
ZigZagPlant · 25/08/2020 21:24

Potentially yes. It’s really unusual for them to ask for 6 months bank statements.

Dinosauraddict · 25/08/2020 21:24

If you're still putting into savings and only spending what you have available, so not getting into debt, then you should be absolutely fine. I'm assuming you also declared you were having a baby under the anticipated change of circumstances, so this shouldn't cause any concern.

GrumpyHoonMain · 25/08/2020 21:27

They take baby expenses into account if you are honest and tell them. Basically the assumption is as long as there aren’t too many fixed contractual bills (and this includes bills / commuting / nursery costs) that you will control the everyday expenses to allow you to keep the house.

Original poster
Melissa85 · 25/08/2020 21:27

@ZigZagPlant I thought this too!

@Dinosauraddict Ok hopefully then! Yes I pay the Bill's etc all come out in my name and put 800 aside each month into savings but just spend the rest on rubbish! Yes they know I am having a baby and all of my maternity leave pay etc

OP posts:
nannynick · 25/08/2020 21:27

Yes, they need to look at affordability. If you have a lot of regular commitments then that could potentially result in you not passing the affordability check. Your day to day spending you can control, your commitments are harder as they are payments to ongoing things.

Fallowdeerhunter · 25/08/2020 21:28

I don’t believe so - they want to see you are earning and not spending over your means. Perhaps not spending it all on porn and gambling. Shopping at Next can always be reigned it.

6 months isn’t unusual in Covid times anyway

Original poster
Melissa85 · 25/08/2020 21:32

@nannynick yeah they have done the basic affordability checks which I have given them every outgoing commitment we have. It's just the spending in shops I am worried about Blush

@Fallowdeerhunter ok thank you hopefully they dont refuse !

OP posts:
ZigZagPlant · 25/08/2020 21:33

I have applied for several mortgages (including one a few weeks ago) and have only ever been asked to do a brief budget on a template.

I’m aware many lenders have pulled anything more than 75% mortgages. But not heard of them examining your finances.

Are there any other factors? Are you self employed?

countdowntonap · 25/08/2020 21:35

I wondered this too. When asked how much I spend, I always think that it shouldn’t matter as I’ll adjust to what I can spend. Have lots of disposable income now, but understand I won’t when I get my ‘dream house’. Will be interest to see what your outcome is, OP.

apric0t · 25/08/2020 21:35

Mmm I wouldn't be worried I don't think, I've just bought my first place a week ago and the lenders were going backwards and forwards for 5 months asking for extra bank statements and things, my broker said they are just being more thorough due to Covid.

Original poster
Melissa85 · 25/08/2020 21:36

@ZigZagPlant yes both the solicitors and mortgage company have asked.

My partner has been self employed for 10 years and I have a bad credit flag on my account from 6 years ago. Nothing terrible though. Maybe this could be why then?

OP posts:
ZigZagPlant · 25/08/2020 21:37

Have you been moving money around? The solicitor wouldn’t ordinarily need to see 6 months of statements.

ZigZagPlant · 25/08/2020 21:38

My partner has been self employed for 10 years and I have a bad credit flag

This will be why.

NameChange564738 · 25/08/2020 21:38

Just remortgaged to hsbc with 90% LTV and they only had 1 month payslip and bank statement (pay slip showed maternity pay even though I didn’t tell them I was on maternity/expecting a drop in salary - also the solicitor was a right bitch) they didn’t mention it Accepted

Original poster
Melissa85 · 25/08/2020 21:39

@ZigZagPlant nope not at all been in just mine and my partners account and have a shared savings account. They have asked us to provide more than the mortgage company themseleves!

OP posts:
marriageoftrueminds · 25/08/2020 21:39

I think you fine. You say you are spending all your money down to zero but actually you aren't- you are saving loads and paying all bills. You are ending up at zero each month in your current account because this is the sensible thing to do - you get interest (in theory!!) on your savings account so of course you would divert any savings there.

They're not going to care what you spend the excess on (unless it were gambling, they hate that).

ballsdeep · 25/08/2020 21:40

@ZigZagPlant

I have applied for several mortgages (including one a few weeks ago) and have only ever been asked to do a brief budget on a template.

I’m aware many lenders have pulled anything more than 75% mortgages. But not heard of them examining your finances.

Are there any other factors? Are you self employed?

Really?! I haven't heard anything about 75% mortgages. Can you share a link
joeysapple · 25/08/2020 21:41

I've always had to provide 3 months bank statements when applying for a mortgage. Maybe it's been upped to 6 due to COVID?

Like PP says, as long as you're not gambling loads or using your overdraft then there should be no issue. Don't worry Smile

joeysapple · 25/08/2020 21:42

Just seen solicitors want six months of bank statements too. Never ever been asked to provide more than proof of residence to solicitor and I'd probably be questioning why they need that tbh!

nancyjuice7 · 25/08/2020 21:42

Being self employed and the bad credit flag will be the reason they have asked for 6 months statements

Also if your spending more than what you disclosed at your full mortgage appointment.

I have separate account to everything else for me to spend on shopping and whatever I want, they only asked for one months statement from each bank account and that's because the numbers added up to what I told them at the appointment.

If at the appointment you were truthful about your spending you'll be fine, as they would have flagged it then as an issue

Original poster
Melissa85 · 25/08/2020 21:43

@countdowntonap yes exactly that's what I am thinking too. Worrying now.

@apric0t Ok thanks hopefully that's the reason and doesnt end up being declined!

@NameChange564738 Oh really? Yes ours our in depth. Kinda glad they didnt just ask me for my last months as that's the worst

OP posts:
sarahc336 · 25/08/2020 21:43

I've always had to supply 6 months bank statements and I too worried this one time as I would always spent all my money by the end of the month (after paying all bills and putting money into savings like you) but nothing was ever said. I think they ask for statements to make sure your income is regular and to see your regular payments, ie your phone, gym, car payment etc. Personally iif you can afford the mortgage and all the direct debits and your income is regular I don't think you should worry x

ZigZagPlant · 25/08/2020 21:44

@ballsdeep

I can’t share a link as it has been discussion held in professional and personal capacities. Details of which were not published.

Initially during lockdown I understand it was because it was impractical for valuers to visit properties. Where’s the lower loan to values are more likely drivebys rather than physical inspections.

It’s normal for lenders to become more risk adverse during times of economic downturn. I’m sure you can verify that via a quick google.

ballsdeep · 25/08/2020 21:48

It’s normal for lenders to become more risk adverse during times of economic downturn. I’m sure you can verify that via a quick google.

Yep, I've had a quick Google and can't really find anything apart from one bank, nationwide , who are only lending 75% to new customers. Nothing else.