How the use of your own money affects mortgage application

Lu_Lu

I have been reading some quite scary articles regarding what you should/ shouldn't do when preparing to apply for a mortgage and now I am worried I may have broken all the 'rules' already. Our house is on the market and we are looking to buy our 'forever' family home, so the mortgage will pretty much double. We have a DIP from HSBC for the lending amount we will require and I've done some working out of our outgoings.

On a very basic level around 40% of our incomings go out each month on household expenses (that's everything from bills to clothes to entertainment), not including the mortgage. Including the mortgage we will probably have about 1/3 of our incomings 'spare' each month. I am really hoping that this will mean that we meet the affordability criteria.

What I am concerned about is my movement of money. For example, each month we both get paid, I work out the monthly 'excess', based on our budget and put this straight into an ISA, with a little going to a rolling savings account which pays for haircuts, swimming lessons and petrol. I also pay off some of our monthly clothing, eating out, birthday presents etc spending which is put on a credit card.

Throughout the month we use a Tesco CC to buy most things on (to get the points) and then pay it off through the month and at the end if there is anything left.

I am very good with money now and keep track of all our spending, budgeting accordingly. I plan for all expenditure and we live comfortably, but this does mean that we have been able to eat out often and buy things when we need them, which I won't be doing with a much bigger mortgage. I've spent a lot from the savings lately as balances for our holiday, tickets etc have been due and I have to get spending money next month.

I am rambling but my point is, if we have to do the full mortgage application pretty soon are they going to look negatively on the amount of 'movement' I have each month with the money? Or is it OK as long as I can justify everything?

As an aside, I do know that the bank have a duty to make sure we can afford it but I absolutely hate being grilled on how I spend my money and having to justify everything, it makes me feel very guilty. I work hard for my money thank you very much!

libf

Everything your describing sounds fine.

Things that lenders will not like; gambling transactions, pay day loans, CCJs, defaults, any attempt to hide outgoings.

Have you checked your credit files?

Prothet_of_Doom

Strange world. I'm going for an interest only mortgage on a buy to let, having paid off the mortgage on our house some 2 years ago, and saving the payments in an ISA. Adding this to some spare from my business gives us the deposit.
The interest is less than we spent last month on eating out.
Whilst applying for the mortgage I mentioned this fact, and there was silence.....then "do you eat out alot?"
Is that bad? To me, it means that if the SHTF, we could choose to NOT eat out and that would pay the interest.

amnblog

Don't base your understanding of the mortgage market on what HSBC say and do.


That's like basing your understanding of female vocalists on Cheryl Fernandez Whatzit

Lu_Lu

libf wrote: »

Have you checked your credit files?

Yes, credit files all good.

Prothet_of_Doom wrote: »

To me, it means that if the SHTF, we could choose to NOT eat out and that would pay the interest.

Exactly! At the moment we do eat out a lot and we are going on a nice holiday this year but that will all change when we move house. This is what I mean - I am potentially going to be penalised for earning good money and having a nice life but I am an adult and can choose not to spend the same amount in the future on these things.

amnblog wrote: »

Don't base your understanding of the mortgage market on what HSBC say and do.


That's like basing your understanding of female vocalists on Cheryl Fernandez Whatzit

I am not sure what you are getting at here.