What are lenders looking for?

jls85

I've been reading a lot of different stories about the new rules for lenders, and I (like many others) am panicking about my application being submitted.

To help me keep some level of calm, it would be useful to know what it is the lenders are looking for on your bank statement? People say good money management, but does that mean never using a credit card or overdraft, or does it mean that you can use these correctly/responsibly each month?

What type of things do they want to see and what are the (likely) deal breakers?

Thrugelmir

Easier to ask why you are concerned. Lenders aren't looking for anything as such. Lenders have set criteria and policies against which your application is assessed. You pass or you fail against these benchmarks.

jls85

I've just read a lot of horror stories of people being rejected based on buying too many coffees at Starbucks (which I don't do but it seems a very granular level of detail to go down to) and I was wondering what type of thing on a bank statement might put them off?

I think my spending habits are ok (I've never missed a payment on anything, although I do have an £800 overdraft), but I've been told they are now looking at every transaction on your bank statement and are rejecting for the smallest thing so it's hard not to worry a bit.

Am I maybe overreacting?

billybear1

Just see a broker, they will match your circumstances to a lender that is looking for your type of business.

nobodysdriving

I think you are 'overreacting'
I was accepted for a mortgage and though I am not too bad I am not the most exemplary of people.....

I have had an agreed overdraft for £3000 and have been using it constantly for nearly 3 years (was paying off other more expensive debts before clearing it)

I then cleared it literally 2 weeks before mortgage application

this seemed to be enough for them as they have not queried anything about my bank statement.

Thrugelmir

jls85 wrote: »

I've just read a lot of horror stories of people being rejected based on buying too many coffees at Starbucks (which I don't do but it seems a very granular level of detail to go down to) and I was wondering what type of thing on a bank statement might put them off?

I think my spending habits are ok (I've never missed a payment on anything, although I do have an £800 overdraft), but I've been told they are now looking at every transaction on your bank statement and are rejecting for the smallest thing so it's hard not to worry a bit.

Am I maybe overreacting?

Show me the post where Starbucks was an issue.

Why are running an overdraft if are you saving for a deposit. Use your saving to clear it.

Who told you that are scrutinising every transaction?

Sounds as if you've been talking to someone whose been rejected.

amnblog

Lenders are not interested in how much coffee you drink or if you have burger and chips in the Dog and Duck every night.


What they do look to the statements for are questions like:


Is your stated income coming into the account as expected?
Are there regular direct debits that could indicate undisclosed debts?
Do you keep your account in credit/within your OD limit?
Can we see rental payments paid regularly - where appropriate?
Are any payments returned as you did not have sufficient funds?
Do your monthly outgoings match what you have declared?
Are there childcare costs or maintenance showing that you have not previously declared?


Certain unusual things in terms of lifestyle may ring alarm bells for lenders - particularly hobbies that appear to be out of control.

We have seen:


Gambling habits shown via numerous payments to online gambling
Unusual fondness for alcohol shown by payees listed


I have never had someone refused because they like a coffee and muffin in Starbucks.


Of course a muffin junkie may be refused by life insurers!

nobodysdriving

in my case I had no savings that is why my £3000 overdraft went on for 3 years (other debts had higher interest rates so it made sense to pay them off first) then I got a lump sum from my father and I cleared overdraft off, the money was enough to send me £10,000 in credit in the account so now I have a deposit and money for legal fees and I have applied for mortgage, got accepted.

If I could have got rid of overdraft earlier I would have, however thankfully I got accepted

nobodysdriving

amnblog wrote: »

Lenders are not interested in how much coffee you drink or if you have burger and chips in the Dog and Duck every night.


What they do look to the statements for are questions like:


Is your stated income coming into the account as expected?
Are there regular direct debits that could indicate undisclosed debts?
Do you keep your account in credit/within your OD limit?
Can we see rental payments paid regularly - where appropriate?
Are any payments returned as you did not have sufficient funds?
Do your monthly outgoings match what you have declared?
Are there childcare costs or maintenance showing that you have not previously declared?


Certain unusual things in terms of lifestyle may ring alarm bells for lenders - particularly hobbies that appear to be out of control.

We have seen:


Gambling habits shown via numerous payments to online gambling
Unusual fondness for alcohol shown by payees listed


I have never had someone refused because they like a coffee and muffin in Starbucks.


Of course a muffin junkie may be refused by life insurers!

brilliant post, very good/helpful, thanks

kingstreet

We have the media and its post-MMR "no steak for three months" headlines to thank for the current levels of paranoia.

!!!!!! there are lenders who don't even ask to see a bank statement, so such spending would be absolutely irrelevant.

Still, it made a few good stories in the Mail & Express though...