What Do Lenders Look for When Assessing My Bank Statements?

Why does the lender need my bank statements and how do I obtain them? 

The reason that a mortgage lender needs to take a look at your bank statements, is to gain a better understanding of you as a person and to see what you are like with spending your money. Your current presentation of you finances, can affect the amount you are able to borrow.

This all comes down to the risk to a mortgage lender. They need to know that you are a responsible borrower and can handle your finances in an appropriate manner. A mortgage is the largest financial commitment you are ever likely to make, so careful thought and planning will have to go into it.

You can easily obtain your bank statements either from your bank over the counter, in the post, or the greener option more commonly used these days, as a document either emailed from your bank or found in your online banking, of which you can print off.

What will lenders be looking for on my bank statement? 

So looking at the main question, what will the mortgage lender be checking for on my bank statement? What is going to flag up per se?

Well as discussed previously, they need to know you’re being responsible with your finances. One thing right off the bat, is they’ll be looking to see if you have any overdrafts.

Going into your overdraft isn’t entirely bad, though going into it often can leave a mortgage lender to question whether or not you can be trusted.

You should also make sure that you careful with potential returned Direct Debits, which may lead a lender to believe you are unreliable with your finances. Additionally, inform the lender of all outgoing transactions, as failing to disclose any may reduce their trust.

As is the case with any credit, always be wary of missed payments on personal loans, credit cards, etc. If you can showcase being able to meet monthly deadlines, this is likely to work in your favour with a mortgage lender.

Will gambling affect my chances of getting a mortgage? 

We are regularly asked this by customers, as frequently a mortgage applicant may find themselves with difficulty progressing, due to a history of gambling.

A bit of fun every now and again isn’t too damaging, but frequently betting large amounts, whether you are making your money back or not, will not look to favourable to a lender at all.

To learn more, please feel free to read our article on “Do Gambling Transactions Look Bad on My Bank Statements?” 

What can I do to show the lender I am reliable? 

During our time working in the mortgage industry, helping customers to obtain first time buyer mortgages or to move home, we typically find that mortgage lenders want to see the last 3 months bank statements.

Bearing that in mind, you should think about the present and future, not your past. There are at least 3 months available to you, to properly crack down on your finances and improve your handling of your income and outgoings.

Our first suggestion is that if you frequently visit a local bookmakers or play with gambling websites online, you should take a break for a while. This is sure to improve your financial state and your mental state as well, as gambling has been known to have an adverse effect on mental well-being.

Following on from this, we would recommend making plans to start saving up your money. Do you need to go out for food or could you cook in? Do you need to treat yourself to non-essentials, or is eventually obtaining your mortgage a treat in itself?

There’s lots you can do to eventually put yourself in the best position for freeing up funds to pay all your bills in time and prove both affordability and reliability with a mortgage lender, ahead of a mortgage application.

Essentially, this all comes down to being sensible and planning ahead of time with the things you are looking to achieve. The further in the past any debts and financial uncertainty are, the better standing you will have with a mortgage lender.

Speak to a Dedicated Mortgage Advisor 

No matter if you are a first time buyer taking on your first ever mortgage process, moving home and in need of mortgage advice or are looking at self employed mortgages, the key is to always be in control of your finances.

If you are struggling with a bad credit history, there may be bad credit mortgages out there available to you, though we would always recommend taking out specialist mortgage advice in order to put yourself in the best place for taking on the mortgage journey.