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2 min read
We know it can feel a bit daunting handing over your bank statements, but lenders do need to look at a few things to make sure you can afford the mortgage today and in the future.
Let's breakdown what they'll be looking at:
They're looking for consistent salary payments or if you're self-employed, an understanding of your income and stability from your business.
It's important your bank statements or tax returns match the details you put down on your mortgage application.
Read more about the types of income you can use in your mortgage application.
They'll look at your spending patterns to ensure you can comfortably manage the mortgage repayments. Not just today, but also if your mortgage rates increased in the future. Remember a mortgage tends to be over a long time period and interest rates can go up and down over the length of the mortgage. So it’s important you don’t over stretch yourself.
It's also important that your bank statements match what you said on your application form in terms of spending commitments you have each month. Anything that you missed or didn’t put on your application might affect their decision.
It's worth reviewing your spending habits before applying for a mortgage to see if there's anything you don't use or need.
Lenders need to check where you got the money from for your deposit. They're looking to see if it came from savings or a disclosed gift.
They'll also want to make sure that you haven't taken out a loan for your deposit or received sudden large unexplained payments in your account – these are both red flags.
Lenders will look out for what they call ‘risky’ spending patterns. Things like gambling or frequently going into your overdraft. Going into your overdraft on a regular basis shows a lender you might be stretched and struggle to afford the mortgage payments.
