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Bank statements for mortgage

Are bank statements for mortgage loans needed in the UK? Get the right advice on this here.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 19th August 2019 *

Are bank statements needed for a mortgage application?

It’s easy to understand why there can be confusion around mortgages and bank statements. Mortgage lenders’ eligibility criteria vary, and your individual situation also plays a role. For example, some may require everyone to back up their mortgage application with bank statements, whereas others may only require them under specific circumstances.

So, why do lenders ask for bank statements when assessing a mortgage application? While there may not be a definitive answer to that question, this article explains why bank statements may be needed for mortgage approval, what mortgage providers will be looking out for, and what else you need to consider when applying for a mortgage.

Read on to find out more about mortgages and bank statements, or better yet, make an enquiry and we’ll introduce you to an expert broker who can answer your questions for free.

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Why do mortgage lenders ask for bank statements?

Under what circumstances might banks or mortgage companies ask to look at your bank statements? Well, underwriters these days have far stricter policies in place. They like to identify the source for every addition to your bank / savings account to ensure that no money laundering or other fraudulent activity has taken place.

Checking your bank statements is therefore a common procedure for many mortgage providers because it can be an easy and efficient way to ensure that your funds have come from a legitimate source. If any of your income deposits look suspicious in any way, mortgage lenders will pick up on this and ask you to trace its origin.

What do mortgage lenders and underwriters look for in your bank statements?

Mortgage companies may want their underwriters to check through bank statements for various reasons, depending on their eligibility criteria. However, the majority of providers who do require bank statements will check the following:

Availability of funds

Bank statements are the best way for mortgage lenders to ensure you actually have the funds required for your deposit, as well as any other initial fees. Some mortgage providers have additional cash-reserve requirements, and will check your bank statements to confirm you have the funds to cover X amount of initial repayments.

Help establish affordability

Bank statements are also used to verify your monthly income and outgoings, therefore giving a good indication of your affordability. Affordability is calculated by dividing monthly outgoings by income, and multiplying it by 100 to get your debt to income (DTI) ratio. The lower your DTI the better, because it means you have more disposable income.

Deposit

All deposits must be sourced. Bank statements enable mortgage companies to trace back deposit transfers. In most cases, this is easily verified as it’s likely the funds will come from the buyer’s regular income account. However, with other deposit sources you are likely to have to provide evidence of where funds originated from.

Tracing gifted deposits

While the majority of mortgage lenders are happy to accept gifted deposits from close family members, many have far stricter requirements when it comes to more distant family or friends. Bank statements are a good way to help trace the gift to its source by also requesting statements from the gift provider.

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How might your bank statements cause your mortgage application to be declined?

Some people want to know how closely mortgage lenders look at bank statements, and what might ring warning bells. If your lender is not satisfied with any of the factors mentioned in the section above, that may inhibit your likelihood of being accepted for a mortgage.

Other impacting factors include:

  • Untraceable cash deposits:
    These are a big no-no for most lenders due to the risks of money laundering.
  • Employer-gifted deposits:
     Again, due to the risks of fraudulent activity.
  • Funds from overseas savings:
    It can be harder for providers to trace the origin of overseas savings, although some  can be more flexible.
  • Gambling funds:
    While one-off wins may be accepted to finance a mortgage, regular evidence of gambling on your bank statements will likely be treated with more suspicion.
  • Payday loans:
    Payday loans are generally another big no-no for lenders, even if they’ve already been paid off. Evidence of other forms of unsecured borrowing are also risky, but some providers can be more flexible.

If you’re worried that any of the above issues may harm your chances of being approved for a mortgage, don’t hesitate to get in touch and we’ll refer you to an advisor specialising in the relevant niche that can help you further.

Bank statements and mortgages FAQ

In this section, you’ll find additional information about mortgages and bank statements, based on the questions we hear most often on this topic.

How do mortgage companies verify bank statements?

Sometimes mortgage lenders call your bank to verify your bank account and statements, but the majority opt to fill out verification of deposit (VOD) request forms, which will be sent to your bank to verify your account.

Are bank statements enough to prove how much you earn for a mortgage?

No, a bank statement will be used to verify your income and your outgoings, but they are not the only factors that affect your affordability or mortgage eligibility.

Will I have to provide bank statements to get a mortgage if I’m self employed?

If you own your own business or are a contractor, you may be more likely to provide bank statements. Most mortgage lenders will also request at least 1- 3 years’ worth of accounts to prove you have a reliable source of stable income.

You can read more in our guide to mortgages for self-employed people.

Do mortgage brokers or advisors need to look at my bank statements?

Some will authorise a mortgage without bank statements, but as the policies are so strict these days, it is quite likely that they will ask to see them.

Can I apply for a mortgage with no bank statements?

Not every single mortgage provider will require you to submit bank statements, but it is common.

Which mortgage lenders ask for bank statements?

A lot of banks ask you to submit your statements for assessment, but not every lender will need you to.

For example, mainstream mortgage lenders Halifax and Santander have recently confirmed that they do not ask to see bank statements as part of standard mortgage applications. However, they stipulate that they have a number of other tools to assess a customer’s creditworthiness.

How many months of bank statements do I need to apply for a mortgage?

Usually, mortgage providers will require the most recent three months of bank statements.

How far back do mortgage lenders look at bank statements?

As above, most providers will request the 3 most recent months of bank statements. A handful may request 1 or 2 month’s worth, while others might ask for up to 6 months.

Why you should speak to a whole of market mortgage broker

We’ve helped over 92,000 people find the right mortgage by introducing them to a broker, even those who may have been declined a mortgage or have a bad credit history.

In fact, our customers consistently rate us 5 stars on Feefo, mainly due to our high levels of service, but also because we offers a 5-star service with access to expert brokers who are:

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  • Have completed a 12 module LIBF accredited training course
  • Are experts on the subject of mortgages and bank statements

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Talk to an expert about mortgages and bank statements today

If you want to know more about the role bank statements play in a mortgage application or are ready to press ahead and apply, make an enquiry with us. We’ll introduce you to a whole-of-market broker who could save you time, money, and potential disappointment. 

We don’t charge a fee, and there’s no obligation or marks on your credit rating. So, what are you waiting for? Get in touch with us today.

Updated: 19th August 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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