Declaring outgoings and evidence on bank statements

mashmash90

I'm already mid application so this is more out of curiosity and panic but I'm wondering how your outgoings are assessed on mortgage applications?

Our broker asked us to fill out a form stating how much on average do we spend on food, shopping, entertainment etc. I genuinely think we put the correct estimates but I just checked our bank statements and there have been a few things in July that look like we spend a lot more. Our computer of 7 years recently died so we bought a new Mac. Also we booked 2 holidays in July (1 for Sept & 1 for November) as we like to grab a deal as soon as we see one. I'm worried they'll look at these costs and say we spend more than we declared- although if you go all the way back 12 months it would average out. Someone please put my mind at ease! How closely do they look at your spend? We would have held off all the purchases if we knew we were going to buy a flat (wasn't planning on it until we came across an advert for the development) and it all happened so quickly. This is a shared ownership mortgage by the way. Broker has obviously seen all our statements and didn't mention anything, would they have or is that not their responsibility?

kingstreet

Your broker does a budget planner to make sure what he's doing is affordable. A lender never sees it.

Most lenders use ONS figures, so media suggestions to eat nothing but beans on toast for three months before you apply for a mortgage are rubbish and complete over-reaction.

A broker would not submit a mortgage application to a lender which didn't at least pass the lender's affordability calculator based on what the broker knows the lender takes into account.

It's going forwards. Relax. You'll be fine. Brought to you by the mug brokers who sit here reassuring the punter while the broker getting paid is telling their client eff all. Sweet.

Dave808_2

Can I ask what is an ONS figure? Just curious myself!

mashmash90

Thank you kingstreet, I'm the sort of person who always prepares for the worst but I know I need to take a chill pill!

kingstreet

Lenders use the Office Of National Statistics figures for a comparable household instead of worrying about individual outgoings.

Can you imagine how long it would take on each application if they questioned every debit card transaction on three months' bank statements?

Exactly.

Dave808_2

I did wonder myself!

kingstreet

Bank statements are routinely checked for non-standard expenditure such as credit card debt, loans, childcare, maintenance etc which are not going to apply in every case.

Payslips are checked for student loan payments, childcare vouchers, season ticket loans etc.

A smart broker ensures every possible item from both is disclosed upfront and the case still meets lender affordability guidelines.