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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 21:50

Maybe amend your search term. There is plenty there.

When they say “remove products” that means altering their eligibility criteria.

QueenPaws · 25/08/2020 21:52

@ballsdeep I'm remortgaging and need 85% and they're not lending. Im using a mortgage advisor and having to wait (adverse credit) as they won't lend 85%

Last two emails from him

Lender will need to start offering products at 80/85% (prefer 85%LTV)

The main bit will be where the more flexible lender get back to 85%LTV re-mortgaging which hopefully they will within a sensible time frame.

derelictwreck · 25/08/2020 21:52

I've always had to supply this - it's completely normal.

They're looking to make sure you don't have more commitments than you do. With me I was always transferring friends money for things I owed and the bank wanted to check that they weren't my dependents

Illdealwithitinaminute · 25/08/2020 21:53

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! Solicitors now have to verify your identity and to track where your deposit came from- it could be related to that. They are quite sceptical if it is just from 'savings' and may be looking for large undeclared amounts- but if you are saving £800 it's quite plausible that's where your deposit came from. If you have a gift/deposit from elsewhere, you have to prove the source of the money for money laundering regulations.

I provided 3 months bank statements last time I bought a house just over a year ago.

NameChange564738 · 25/08/2020 21:55

@ZigZagPlant just not true though.. literally just remortgaged @ 90%

ZigZagPlant · 25/08/2020 21:57

@NameChange564738

You will note i said “many” lenders and not all. I don’t dispute that some are still lending at 90% LTV. But as I said (and as is well documented) many haven’t been.

LST · 25/08/2020 22:02

How weird. We didn't need to show them any bank statements apart from the one that the deposit was held in which was a savings account. Is it the done thing to normally ask for statements? We're with nationwide and were first time buyers

minnieok · 25/08/2020 22:04

We were asked for one months statements, they then asked for 2 more as we had been on holiday that month and had a large legal bill.

Original poster

Melissa85 · 25/08/2020 22:20

Wow thanks everyone for your responses! Will have to wait and see I guess! It must be down to my partner being self employed and me being an idiot 6 years ago getting into debt with a credit card... even though it was all paid off it still flags annoyingly....

Will see what the out come is with the manic spending I have been doing.... our official appointment isnt until next Thursday but documents etc have been sent through already so guess we will find out then!

OP posts:

safariboot · 25/08/2020 22:25

It could be. But if the spending's in normal retail stores and considering you're also saving a lot, I'd be surprised if it's an issue.

MMN123 · 25/08/2020 22:37

They won’t worry about non essential spending. They’ll believe you can stop doing that!

peachgreen · 25/08/2020 22:50

If you're putting £800 into savings each month and still meeting all your committed spending then you'll be absolutely fine. When DH and I got ours we were putting sod all into savings!

Bringonspring · 25/08/2020 22:55

We just went through the mortgage process, we have 50% deposit and are only borrowing 2 times salary, perfect credit rating and they still wanted to see 6 months worth of statements. I really wouldn’t worry.

BackforGood · 25/08/2020 23:56

Solicitors now have to verify your identity and to track where your deposit came from- it could be related to that. They are quite sceptical if it is just from 'savings' and may be looking for large undeclared amounts

Can anyone tell me a bit more about this ?
It's over 15 years since I've bought a house, but some younger relatives are at the stage of getting ready to buy. Various cousins have been talking in general terms about buying in the next year or so. I don't want to give any wrong thoughts. Is it a problem if a relative gives them a large deposit ? (Relative happy to sign a declaration saying is completely a gift and they would have no financial interest in the property).

If they can then demonstrate from their outgoings they can meet the mortgage payments, would they still have to show they are saving more than the mortgage payment would be ?

Dinosauraddict · 26/08/2020 03:12

@BackforGood - most lenders have no issues with gifted deposits as long as it's declared and the correct paperwork is provided to confirm that it's a gift, not a loan, and the giver will have no legal interest in the property.

@OP - don't kick yourself that the 6 months of statements are because of your bad credit history. I'm in the process of buying a house with no mortgage, and my solicitor still wanted 6 months of bank statements due to money laundering regs.

Dinosauraddict · 26/08/2020 03:13

@BackforGood just to confirm I said 'most' lenders as a couple have recently cracked down on this and you may see a few articles online about how the BoMaD is being shut down. There will still be plenty of lenders to choose from though, so I wouldn't be worried!

0DimSumMum0 · 26/08/2020 03:17

Yes a friend I know was refused a mortgage because their outgoings was more than their incoming.

ZigZagPlant · 26/08/2020 06:16

@BackforGood I am a solicitor who specialises in property so can help answer your question.
Solicitors just have to verify the source of funds. There’s a bit of discretion on the part of the solicitor as to what they require. Usually it’s 3 months bank statements. Re savings if it’s been in an account for 3 months that’s usually enough. You do ask for the source of funds. If you see a large deposit into an account you will ask for a “paper trail”. There’s certain markers. So if a young couple who work in modest job have an enormous deposit that would lead you to look a bit further. The biggest factor is satisfying yourself the client isn’t money laundering, it’s easy to get implicated and get into trouble yourself.

Re gifts. The high street lenders are fine. The office person gifting will just need to confirm the gift is non refundable, they won’t have any interest in the property and they won’t be living there.

ZigZagPlant · 26/08/2020 06:18

@Dinosauraddict really? Could you point me to something. Genuinely interested - not being critical. What is the lenders concern?

Dinosauraddict · 26/08/2020 07:38

@ZigZagPlant yes there's been a couple of lenders this month (led by Nationwide), see coverage such as:

www.google.co.uk/amp/s/www.independent.co.uk/news/business/news/nationwide-mortgages-deposit-bank-mum-dad-a9652021.html%3famp

ZigZagPlant · 26/08/2020 09:10

Thank you @Dinosauraddict

With all this in mind it’s probably no surprise that OP’s finances are being examined.

fromdownwest · 26/08/2020 10:27

I can confirm first hand that 90% mortgages are available.

HSBC - Like trying to get Glastonbury tickets each morning, log on 7:30 am and pray that you can secure a rate, fail and repeat every day

Nationwide - Super stringent underwriting at present

Virgin Money have just entered at 7 and 10 year fix. Not sure recommending a 7 year fix for a firs time buyer is suitable.

Lenders are asking more and more questions, that is a fact. If they can see someone is a habitual spender / gambler etc then it will warrant further questions.

People need to understand that lenders are not obliged to lend, they are carrying the risk, and as such will undertake their own due diligence.

With the OP's question.

As long as you are not in your overdraft, and your outgoings are not exceeding the income, then the short term spending can be explained. This is where a broker becomes invaluable, we would have made the underwriters aware of this at submission.

Equimum · 26/08/2020 15:39

Stress that you had to make lots of one-off payments for the arrival of your baby.

We were paying a lot for a private nursery when we last applied for a mortgage, and they took into account that we could easily save this money, as I was not working and we could make the fee money available if necessary.

BackforGood · 26/08/2020 17:47

Thank you @Dinosauraddict, and @ZigZagPlant

I presume, if the 'gift' made the LTV a much smaller %, then more mortgage lenders would be willing to look at people with earnings that "just" squeaked in to their criteria, as there would be no (or very limited) risk that they couldn't recover their lendings, should the borrower default.

Sorry for slight derail, OP.

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