Why do mortgage companies need to see bank statements

_Andy_

Charlton_King wrote: »

Just to take this one step further - are there any lenders who will accept bank statements INSTEAD of payslips..?

My thinking is with regard to other regular income sources - rental from property, regular subsidy from relations etc.

Rental from property is provable via ASTs etc.
'Subsidy from relations' wont be accepted as an income source.

Charlton_King

_Andy_ wrote: »

Rental from property is provable via ASTs etc.
'Subsidy from relations' wont be accepted as an income source.

1. In what sense is an Assured Shorthold Tenancy 'provable', then..?

2. And if I can show, via bank statements, that I have been in receipt of the same monthly sum from a relative for the past 12 years..? This does not constitute an income source at least as acceptable as the vagaries of property income with tenants coming and going and occasional vacant periods with zero return..?

nikki28

hi

I used to be a mortgage underwriter:rolleyes: and we need to see bank stats and payslips if you dont fly thru the system - its not to check income its to see if you are having payments returnd - going over your overdraft limit etc - basically if your struggling to manage your bank account the general feeling is you would struggle with the mortgage

nikki28

Charlton_King wrote: »

1. In what sense is an Assured Shorthold Tenancy 'provable', then..?

2. And if I can show, via bank statements, that I have been in receipt of the same monthly sum from a relative for the past 12 years..? This does not constitute an income source at least as acceptable as the vagaries of property income with tenants coming and going and occasional vacant periods with zero return..?

1 . When you have a BTL motgage we would need to see an AST and tha bank statements would be in line with this.
2. The same income from a relative for the last 12 years unless thru a court order wouldnt be taken into account it could stop tommorow.

Dan_1976

Blank AST's can be found online so bank states will back up any rental income. Mortgage payments on those rental properties have to taken in to account also.

Charlton_King

I guess what I'm asking is: can bank statements substitute for payslips in any circumstances? Apologies to the OP for this half-hijack.

_Andy_

Charlton_King wrote: »

I guess what I'm asking is: can bank statements substitute for payslips in any circumstances? Apologies to the OP for this half-hijack.

No.
In the context of your specific income, the rental could be taken (via BTL mortgage payments if applicable) but the income from relatives would not.

Charlton_King

_Andy_ wrote: »

No.
In the context of your specific income, the rental could be taken (via BTL mortgage payments if applicable) but the income from relatives would not.

Understood...

... but ridiculous.

Affordability in relation to total income/expenditure is surely the key criterion for lenders. To place a higher and totally unjustified credibility on one form of income rather than another - and then to compound this by scarcely taking expenditure into account at all - is the kind of lunacy which brought you el credit cruncho.

I know many people who would easily meet these type of criteria and walk off with large mortgages - but because they lead a high-spending, profligate lifestyle they are actually far worse bets lendingwise than many people who live within their means and who are currently being laughed out of court by the industry.

I thought lenders were supposed to have smartened up their act - but it seems they haven't learned their lesson and are still providing a third-class lending service to the country.

Isn't the idea of having a government precisely to get these kind of operations to toe the line..?

_Andy_

Outgoings are taken into account by lenders. Someone who has, say, £1000 of outgoings per month on credit commitments like loans will be able to borrow signifcantly less than someone with the same income but no debts.

Charlton_King

_Andy_ wrote: »

Outgoings are taken into account by lenders. Someone who has, say, £1000 of outgoings per month on credit commitments like loans will be able to borrow signifcantly less than someone with the same income but no debts.

Ah, that explains everything... people only ever spend using credit agreements.

Yes, right...

Your average lender will therefore lend indiscriminately to Joe X, then, where his bank statements clearly show zero outgoings on 'credit commitments' whilst the name Harrods, various foreign holiday agents and the local Rolls Royce dealership crop up to the tune of £thousands with monotonous regularity...

My point stands. The lenders are rubbish.