Pre-mortgage bank account behaviour - problem?

notmyrealusername

Would be grateful for some opinions on this from those 'in the know'...

Since my financial difficulties around seven years ago I have drastically altered the way I deal with money. I have been debt free for over three years, have caught the savings bug and am now so organised with my finances it borders on OCD!

When I get paid I syphon off most of my wages into my savings account and leave only enough to cover things like rent, council tax, gas/elec etc in my current account. I then transfer back a lump sum each month and purchase premium bonds while I'm saving for a deposit. For general spending I use a cashback credit card and then pay off in full when the bill comes in, again transferring the money from the savings account to pay the bill.

The above method works perfectly for me as I know exactly where I am and I even put money aside each month for incidentals like haircuts, pet vaccinations etc so that when the time comes for these I have the money ready and waiting.

The 'problem' with this is that there is generally only a very small amount in my current account, normally sub £50 and most day to day transactions go on my credit card which I then pay off in full, transferring the money back from my savings account to pay the bill.

Is this likely to cause a problem when applying for a mortgage? I have seen posts on here of people being asked to justify small payments and being asked for supporting evidence etc If it's likely to cause a problem I can start leaving my wages in the current account meaning I would have a larger balance and they could see exactly where my money went when they ask for bank statements.

Thanks for any input, although my credit file is squeaky clean and I am debt free I realise my previous IVA will affect my ability to get a mortgage so I don't want to make things harder for myself if I can help it!

Dukesy

OH and I siphon money from our current accounts into our savings accounts and leave ourselves a monthly 'allowance'. He also leaves large amounts sitting in his business account.

When we went for a mortgage last, we showed the bank all our statements showing that whilst we had very small amounts of money in our current accounts, we had money elsewhere. You never know what might pop up as an issue, but just be transparent with your accounts and money habits and explain what you do as you have here.

Gizmo247

I too have a complicated setup where my wages are split at source and directly debited to a number of accounts in order to get a better deal on interest or frills. The money eventually finds its way into my mortgage. When applying for an FD mortgage, they had to phone me up and get me to explain how it all worked. The FD employee eventually got it (should have sent a diagram) and was suitably impressed. I think companies like to see good money management, saving rather than spending and exploiting the products out there and it is up to the companies to provide those product for us to exploit.

Wh05apk

Your bank account will be fine, the issue will be the IVA, that will exclude you from a lot of high street lenders, so this is definitely a case to use broker on.

notmyrealusername

Thanks for the replies, the accounts are with the same bank so I can show transparency in the transactions but just wondered if I was likely to be causing unnecessary issues for myself!

Wh05apk wrote: »

Your bank account will be fine, the issue will be the IVA, that will exclude you from a lot of high street lenders, so this is definitely a case to use broker on.

I have already approached a broker who has placed lots of ex-IVA mortgages and they are confident of acceptance and a reasonable rate. The IVA and all defaults are off my report (although I realise I will still have to declare it in the sense of the 'have you ever...' questions) and I have lots of green 'ticks' on the report through well managed credit over the last three years - credit cards ALWAYS paid off in full, stability in my job, bank account and electoral roll too. I also maintained car finance throughout the IVA so that's more green ticks going back longer than the three years my IVA has been complete. My own bank doesn't lend to ex-IVA/bankrupts full stop, no matter how long ago, so I will definitely need to go elsewhere when the time comes. In the meantime I'm saving, saving, saving