Terrible bank statements

HARS · 11 September 2018 at 4:04PM

I'm applying for a mortgage and I'm worried about the state of my last three month's bank statements. We didn't realise at all that we would be buying a flat so soon and have spent a lot of money this summer. I have not come out of my overdraft for the past three months, and I accidentally went over the overdraft limit by £20 in July, but moved money across from my savings account as soon as I noticed.

My question is, how big of a problem is this when applying for a mortgage? If the lender asks for three months bank statements and sees that I haven't come out of my overdraft and that I went over the limit will that scupper our chances?

We still have a 15% deposit, half saved and half gifted. We're also going down the help to buy route (24%) so we're applying for a 61% LTV mortgage. My partner's income is high and mine is average so we're applying for a mortgage that is well within what online calculators say we can borrow, and the mortgage payments would be about half the rent we're paying now (even with a 5% rate).

My partner's credit report is completely clean. A previous mortgage with no missed payments, no defaults, no CCJs, no missed payments, no loans, no credit card. But he also dips in and out of his overdraft every month.

My credit report has 3 missed utility payments (the last one was 12 months ago) as we were disputing a large bill — which in hindsight was stupid I should have paid it and then disputed it — but now it looks like we just didn't pay and it's on my credit file. But no defaults, no CCJs, no credit card and no missed payments on any unsecured loans (I only have one loan that isn't settled with a low monthly payment).

Our broker (L&C) is being really dismissive about this and says it's not a problem at all. But I worry that our bank statements will stop us getting a mortgage.

Any advice/experience is welcome.

synavm · 11 September 2018 at 4:25PM

Interesting, I had precisely the same issue, dealt with L&C through the HTB route and they were very aware of it being an issue - largely because I spoke to them after I had been declined by Nationwide!

As far as I'm aware, the high street lenders who don't automatically ask for statements are Halifax, TSB, Virgin Money. Natwest apparently under a certain LTV don't, however, a broker tried to place me with them and they did ask for bank statements and as far as I'm aware, whilst being generally flexible, they're not keen on heavy overdraft usage, and unauthorised overdrafts are usually a decline with them. RE the late payments, I think a broker will be able to best advise you, as I didn't have that issue.

In the end I got an offer from TSB. Quick side note, though, although some lenders don't automatically ask for statements, they will be able to see a figure for your overdraft on your credit report. Worth checking that out before applying - I think there's a list out there for which lenders use which credit reference agency/agencies so you will probably need to check multiple reports.