bank statement red flags

6 bank statement entries that can raise a red flag from an underwriter!

Bank statements provide lenders an insight into your lives and spending habits, but some activities could result in your application unexpectedly being turned down.

1.Gambling habits

If a lender discovered payments to bookies for example Ladbrookes or Paddypower on your bank statement, they’re probably going to cancel your application. If you’re willing to risk your money, lenders would find borrowing to you a risk too.

2.Being overdrawn

If you tend to dip into your overdraft, this insinuates you’re struggling to manage your money effectively and sets alarm bells ringing for lenders.

Unless you desperately need to, don’t go overdrawn just because your bank lets you. The more frequently you do it, the worse it looks, and this could risk your mortgage being declined.

3.Payday loans

If you require a payday loan it implies you cannot keep to your monthly net income so a new, large mortgage commitment could be a problem in the future.
Bounced direct debits, where you might not have enough funds in your account at the end of the month is another stumbling block.

4.Unexplained cash deposits

Regular payments from family and friends could be viewed as a financial commitment and affect your overall affordability.
Borrowers will also need to have a reasonable explanation for any unusual or larger payments.
One-off cash payments can raise fears among lenders over money laundering.
Also to note, those who gift part of deposits to borrowers, will often need to provide proof of wealth too.

5.Bank statement jokes

Believe it or not joke references to friends or family can cause problems.

A bit of light-hearted banter should not be played out on your bank statements. For example, A lender doesn’t want to see a friend paying you for that meal you paid for last week, with a crude reference entry.

6.Suggestive card payments

It’s been known for lenders to spot a one-off payment, for example to a company like mamas & papas, and query this to see if the borrower was pregnant. This could impact their affordability further down the line.

If you’re up front and honest about your spending patterns from the start, your mortgage advisor can help you get the best results. If you fail to disclose any information, the lender will find out later on and this could risk your application being declined.