Bank Statements and Mortgage Applications

How many months’ bank statements do you need for a mortgage application?

For a mortgage application, you will typically need to provide 3-6 months of your most recent bank statements. This varies by lender, so it’s important to confirm their specific requirements. Most lenders now accept electronic PDF statements, but again, the policy can vary by lender.

You generally only need to provide statements for the accounts holding your deposit and those showing your regular income. Lenders will look to understand the source of your deposit and that the money has been in your account for some time, typically at least three months. If a large amount has recently appeared, you’ll need to show where it came from, for example, with a letter if it was a gift. This is because you need to prove your deposit is from a legitimate source, like your savings, and not a hidden loan.

Remember, bank statements are just one part of the picture; you’ll also need other documents, such as payslips, to provide full proof of your income and affordability.

Why lenders need to see your bank statements

Mortgage lenders need you to provide them with bank statements so that they can see clear evidence to verify your income, clarify affordability, check for any additional risk factors and see your deposit funds.

Specifically, lenders and underwriters will look for the following on your statements…

• Your income
• Your outgoings
• The availability of funds for the deposit
• The source of your deposit
• Risk factors, such as excessive gambling, payday loans or possible fraud

Lenders conduct a thorough affordability assessment, weighing your income against your outgoings, to confirm you can manage the monthly repayments and to ultimately determine your eligibility and the maximum amount you can borrow.

Lenders and underwriters will also need to see your deposit funds in your account and like to trace the source of them to make sure they were saved, earned or gifted legitimately.

Issues on your statements that could trigger a rejection

If your finances don’t convince the lender that your mortgage will be affordable, or you don’t have enough of a deposit, there’s a good chance they will reject your application.

Mortgage applications can also be declined if the following is evident from the applicant’s statements…

• Untraceable cash deposits: These are a big no-no for most mortgage lenders due to the potential risk of money laundering.
• Excessive use of an overdraft: A statement showing a large overdraft balance that is consistently in use may lead a lender to conclude that you’re unable to afford your mortgage repayments.
• Employer-gifted deposits: Again, due to the risks of fraudulent activity.
• Funds from overseas savings: It can be harder for mortgage providers to trace the origin of overseas savings, although some can be more flexible.
• Gambling funds: While it’s possible to use gambling winnings for a mortgage deposit, regular evidence of gambling on your bank statements will likely be treated with more suspicion.
• Payday loan use: Getting a mortgage after a payday loan can be much more difficult, 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.

What to do if you’ve been declined due to a bank statement issue

If you submitted bank statements to your lender and they rejected you because they saw something they didn’t like on them, here are the steps to take to get things back on track…

Step One: Don’t reapply just yet

Suppose you reapply for a mortgage so soon after a rejection. In that case, there’s no guarantee that whatever issue the lender saw on your bank statements won’t derail your plans again, which could negatively impact your credit report. You’ll either need to find a solution to the problem or find a mortgage lender who is willing to overlook it.

Step Two: Speak to a mortgage advisor

A mortgage advisor can discuss your application with you and explain the possible reasons why you were declined. Our expert team help people with declined applications every day. It’s free to contact us for a no-obligation chat, and we can advise you on your next steps so you can proceed with confidence.

We can help you find a solution to the problem or introduce you to another lender who may be able to overlook it.

Step Three: Have a breather while your mortgage advisor does the rest

Your advisor will take the lead for the next steps in the process. After a quick fact-find to establish what your lender didn’t like on your bank statements, your advisorr will assess whether there are grounds to appeal against the lender’s decision or if your best bet is to move to another lender.

Make an enquiry, and we’ll match you with your ideal mortgage broker today.

What to do if you’re worried you’ll be declined

If there’s something on your bank statements that will cause a mortgage lender to reject your application, speak to a mortgage broker before applying. They can assess precisely how much risk the issue poses to your mortgage plans, suggest ways to solve the problem and make sure you use a mortgage lender who can overlook it.

Our mortgage advisors can match you with a lender who…

• Offers mortgages based on higher income multiples
• Offers 5% deposit mortgages
• Accepts non-standard deposit sources
• Has a higher appetite for risk than high-street lenders

Are there lenders who don’t ask for them?

Most mortgage lenders need to see your bank statements at some point, but a small minority use other ways to assess affordability and creditworthiness.

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

If there’s something on your bank statements that you don’t want a lender to see, remember that the brokers we work with could help you find a mortgage provider who overlooks issues that most banks and building societies would consider deal-breakers.

If you prefer a lender who doesn’t look through your bank statements, your broker can, by all means, match you with one who has this policy. However, keep in mind that your broker will need to see your bank details at some point to comply with industry regulations.

What can you do to prepare your bank statements for a mortgage application?

If you already know that you intend to apply for a mortgage over the next 3-6 months, you can start straight away to ‘optimise’ your bank statements by taking the following steps:

• Keep your bank balance out of the red and avoid any unnecessary use of your overdraft facility
• Stay within your usual budget limits and put a hold on any other non-essential purchases
• Avoid any excessive recreational spending (gambling, etc.)
• Make sure your employment income goes into the same account and avoid making any changes during this period

Why Use OnlineMortgageAdvisor?

No matter your mortgage situation, we’ve got you covered. Our mortgage experts support you from the start to the finish of your application. Our specialists can search the market to find the best deal for you.

With access to hundreds of lenders, your dedicated mortgage adviser can find the best possible mortgage deal for your circumstances. We’re so confident in our service that we guarantee it – if you find a better mortgage deal elsewhere, we’ll give you £100*.

Call 0330 818 7026 or make an enquiry for a free consultation, and a member of our team will explain exactly how we can help