Should we simplify finances prior to mortgage application?

Snuggles

OH and I are looking to get our house on the market in the next few months. I bought the house back when mortgage applications were a very simple affair - I found a mortgage I wanted, rang the building society, they sent me some forms to sign, and it was all approved, no hassle.

This time we will be applying for a joint mortgage and obviously things have changed in terms of affordability checks etc. I'm just wondering if it's advisable to simplify how our finances are organised in preparation for applying, or shouldn't it matter? We've ended up with a number of accounts and money being transferred between them each month, due to trying to get a (relatively) decent rate of interest on savings, and wanting to maintain separate current accounts.

Our set up is that we have individual current accounts that we each get paid into (both with Bank 1). Then we have a joint current account with Bank 2 which we use as a bill paying and savings account, maintaining the max balance allowed (for interest purposes) in this account. I also have a second individual current account with Bank 2 which is used purely to hold savings (again due to the interest rate). Each month, OH transfers money from his Bank 1 account to the Bank 2 joint account to cover his share of the monthly direct debits. I also transfer my share from my Bank 1 account, but firstly it goes into my individual current account with Bank 2 (in order to meet the t&c's) then it gets transferred on to our joint account with Bank 2.

In addition to this, each month, all of our discretionary spending (groceries, fuel, leisure activities, major purchases etc) goes on a cash back credit card which we pay off in full each month. As the card is in my name and OH is an additional cardholder, each month, he transfers his share of the card bill from his Bank 1 account into my Bank 1 account and then I pay the credit card bill in full from this account.

It's not massively complicated but it does mean that I have three current accounts and OH has two (one being joint) and there are quite a few money transfers going on each month between all our accounts. I guess it would take a bit of time for someone to follow what's happening by looking at our statements.

Is this likely to cause any issues when we come to apply for a mortgage?

Thrugelmir

None. Lenders aren't interested in how you move your money around.

I bought the house back when mortgage applications were a very simple affair - I found a mortgage I wanted, rang the building society, they sent me some forms to sign, and it was all approved, no hassle.

Lending criteria was arguably tighter back then. Income multiples being much lower.

Snuggles

Thrugelmir wrote: »

None. Lenders aren't interested in how you move your money around.

Ah thanks, I was just concerned as I thought you had to provide months worth of bank statements these days, and thought it could look odd with money going in and out of various accounts.

Thrugelmir wrote: »

Lending criteria was arguably tighter back then. Income multiples being much lower.

I must admit I was shocked when using various banks' online calculators to see how much me and OH could likely borrow. I wouldn't be comfortable taking out a mortgage for anything more than about half of what they say we could potentially borrow.

Thrugelmir

Snuggles wrote: »

I must admit I was shocked when using various banks' online calculators to see how much me and OH could likely borrow. I wouldn't be comfortable taking out a mortgage for anything more than about half of what they say we could potentially borrow.

Interest rates are correspondingly much lower. What one can actually borrow is relative. My first mortgage was 2.75 times joint income, with a 95% LTV at 10%. Within four months interest rates had risen to 14%.........