Lender scrutiny of past vs future outgoings

At some point in the next couple of years we are likely to apply for a mortgage. We haven't taken one out since the new regulations/guidelines around affordability come in so curious as to how much attention is paid to bank statements and whether you get an opportunity to mitigate these (i.e. explaining why they will be reduced) or is it just a case of "computer says no".

The reason I ask is that we have some outgoings that will change when we move house, but it is a bit of a chicken and egg in that you don't have statements to prove that they will change in advance of moving. Examples of this include:
  • Spending on petrol should be reduced as we will live much closer to my wife's place of work
  • My net salary will increase because my season ticket loan will be reduced
  • Currently we pay an annual maintenance charge of around £200 that most houses wouldn't have
  • Childcare costs will go down because our child will be at school / less before/after school care needed
  • Currently I pay into a child's regular saver every month but could bin this if it impacted on mortgage approval
  • We currently live in an internet ghetto with very limited services available meaning that our total bill for phone, tv and broadband is quite high (over £100/month); if we moved to an area with Virgin and/or LLU then we could benefit from a bundled package. For example most people with Sky TV can get cheap/free broadband but because they are not in our exchange you have to pay a surcharge for a basic ADSL service.

Broadly speaking if we move house I'd expect this to reduce outgoings (excluding mortgage) by around £300/month but that wouldn't be apparent from just eye-balling bank statements. If needed, how would we get this message across? I am not massively concerned because the reality is we should be borrowing well within our means at low LTV, but it is good to prepare these things.

Replies

  • lspell1lspell1 Forumite
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    Tell your Advisor what your outgoings are going to be when you move home. Then give the Advisor the same explanation you've just wrote above as to why you're giving them those figures.
    If it is picked up on your statements by the lender the Advisor can then tell the lender why. An explanation should suffice providing it makes sense.
  • HangTimeHangTime Forumite
    60 Posts
    Might not be going via an advisor though - obviously best mortgage products may change over time but right now I'd be going with First Direct.
  • amnblogamnblog Forumite
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    I'm sure First Direct will be more than happy to go through all of this detail with you.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • goodwithsavinggoodwithsaving Forumite
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    Why would you not use a broker? If you want to give yourselves the best chance of getting a mortgage then use one. I knew I'd have my port approved and still used one. Why? Because they know how to present a case like yours above in a much better way and have the relationships with the lenders. They are worth every penny.

    If not.......speak to FD.
  • glosoliglosoli Forumite
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    Lenders will base your affordability on what the situation will be after you move house, not what the circumstances are beforehand. It works both ways, you may see a decrease in some areas whilst others may increase, hence why it's important to research realistic figures prior to your mortgage interview. Nevertheless upon credit scoring, a large portion of lenders base the affordability on averaged data from the ONS rather than what you actually spend, other than a few key expenditures such as CT/water/insurances/debt repayments/childcare/school fees which are manually input.
  • nicmylesnicmyles Forumite
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    I remortgaged with First Direct last year. If your main bank account is with them, you don't need to submit bank statements for that account, they just check it themselves.

    They will go through the affordability questions with you over the phone, so you can explain everything you've said to their advisor verbally.

    They may query some items on your last three months' of transactions - for me, there was a monthly private pension payment they wanted to know about, plus a holiday I took. But again, everything is done verbally so you can explain all circumstances and mitigating factors to them easily.

    I have to say, I found them incredibly helpful and reassuring when going through the mortgage process. To the extent that, when their rates improved a couple of days after finalising the offer, the advisor I had dealt with phoned me back to check to see if I wanted to redo the application.
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