When lenders ask for your bank statements whether you are a First-Time Buyer in Manchester, Home Mover in Manchester or someone looking to Remortgage in Manchester. You can expect the lender to analyse them, looking at all aspects. However, they all have the same overriding objective, which is to determine whether you can manage your money responsibly and maintain regular mortgage payments.
You need to really be thinking about what your statements and other elements of your personal banking say about you. One trend that has come to the forefront is the question of gambling transactions on bank statements.
Whether you have an annual flutter on the Grand National or a regularly Whether it is just the annual flutter on the Grand National or a regular use of internet betting sites, there is clearly nothing illegal about licensed gambling. With many bookmakers advertising on the mainstream media, lots of people see gambling as simply a pastime or hobby.
However, even the bookmakers and gambling advertisers urge customers to ‘please gamble responsibly’. And this is the same message to bear in mind when it comes to applying for a mortgage. Whilst it is not the lenders job to tell you how to live your life, how you spend your money or indeed to moralise on ethical rights and wrongs of gambling. They do have a duty (underscored by mortgage regulation) to lend responsibly.
If lenders need to prove to the regulators that they are making prudent lending decisions, it isn’t entirely unreasonable of them therefore to expect the people to whom they lend to adopt a similar approach when it comes to their personal finances. Think about it. If you were lending your own money would you lend it to the applicant who gambles or the one who doesn’t?
As we mentioned above, it is not illegal to gamble, so just because you have the odd gambling transaction on your bank statements doesn’t mean you will be automatically declined for a mortgage. However, the lender will consider whether or not these transactions are reasonable and responsibly. Thus they will particularly look at the frequency of transactions, size in relation to income and the overall impact on the account balance.
If these gambling transactions are small and infrequent, making no significant impact on your overall regular credit bank balance, then they are likely to be disregarded and classed as not important. On the contrary, if you bet most weeks and are constantly overdrawn, the lender is likely to take a view on this as irresponsible and could decline your application.
As we’ve seen, basically lenders are looking at your bank statements to show how you manage your money and to help them establish whether this gives them either the confidence that you are financially prudent or the evidence that you are not.
Remember, lenders are financial institutions that, either directly or as part of a wider group, often sell current accounts, overdraft facilities credit cards and personal loans, so understand that these things can all play a part in prudent financial planning.
The key for a mortgage applicant is how these facilities are managed. For example, having an overdraft facility and occasionally using it, is not inherently a bad thing; regularly exceeding the overdraft limit – not so good. Thus, lenders will look for excess overdraft fees or returned direct debits because these would normally show that the account is not being well conducted.
Other things to look out for include credit transactions from pay-day loan companies; “undisclosed” loan repayments (i.e. if you said on the application that you have no other loans but there appear to be regular loan payments, this could be a problem); they would look out for any obvious missed payments; finally, they might also consider how much of a typical month is spent overdrawn – i.e. if you only just go into credit on payday and for the rest of the month are overdrawn, how sustainable is this mortgage?
The simple answer is – be sensible and, if possible, plan ahead. Typically, a bank would ask for up to three months of your most recent bank statements. These will show your salary credits and all your regular bill payments. Thus, if you know you’re likely to want to apply for a mortgage in the not-too-distant future, try to make sure that you avoid any of the above pitfalls.
Take a break from gambling for a short while and work on presenting your bank account in the best possible light. Your Mortgage Broker in Manchester can help you as there are some lenders who may ask for fewer bank statements than others or indeed some may not even ask for them at all.
However even these lenders would reserve the right to request bank statements in certain circumstances, so your best bet (no pun intended) is to be as prudent as possible in the run-up to any mortgage application. Remember, if you do gamble, please gamble responsibly!