When you’re applying for a mortgage, you’ll need to provide some documents to the lender as part of their underwriting process.
It’s good to keep in mind that the specific requirements for these documents can vary depending on the lender and the type of customer you are. However, one of the most commonly requested documents by lenders are bank statements.
In this guide, we want to help you understand what mortgage lenders are looking for when they review your bank statements, and how many statements they might ask for.
Why does a mortgage lender want to see my bank statements?
Mortgage lenders want to ensure that you can afford the mortgage and that you are not taking on more debt than you can handle.
When reviewing your bank statements, the lender will be looking for several key pieces of information. They’ll want to see your income, including your salary, any bonuses or commission, and any other sources of income. They’ll also look at your regular expenses, including bills, rent or mortgage payments, and any other regular payments you make.
The lender will also be looking for any irregularities in your bank statements. For example, they may flag any large transactions or payments that may indicate that you’re struggling financially or taking on more debt. This could include large credit card payments or gambling transactions.
By reviewing your bank statements, they can get a good picture of your financial situation and make a more informed decision about your application.
How many bank statements will my mortgage lender require?
Different lenders may have different requirements for the documents they need to assess your application. While some lenders may require more documents than others, it’s always a good idea to be prepared and have as many documents ready as possible.
It’s important to know that while most mortgage providers can request to see your bank statements, there are some instances where they may not require them at all.
When applying for a mortgage as an employed applicant, it’s common for lenders to request between one to three months’ worth of bank statements. However, it’s worth noting that some lenders may not require bank statements at all in certain instances.
In addition to bank statements, you may also be asked to provide other documents, such as your P60.
As a self-employed mortgage applicant, it’s important to be aware that most lenders will typically require you to provide three months’ worth of business bank statements and three months’ worth of personal bank statements.
In addition to your bank statements, mortgage lenders may also require your SA302’s and/or your company accounts.
If you have other sources of income, such as rental income, maintenance payments, or benefits, it’s likely that mortgage lenders will require three months’ worth of bank statements to provide evidence of this income.
Are there lenders who don’t ask for them?
It is typical for mortgage lenders to request bank statements as part of their application process. However, some lenders such as Halifax and Santander may not require bank statements on most applications as a standard practice.
Instead, they may request bank statements on specific applications, such as those involving additional income sources (e.g., rental income, maintenance payments) or self-employed applicants.
What do lenders look for on bank statements for mortgages?
Some of the key things they look for include:
- Regular income: Lenders want to see that you have a steady income stream and can afford to make regular mortgage payments.
- Outgoings: Lenders will examine your bank statements to see what regular outgoings you have, such as bills, subscriptions, and other financial commitments.
- Childcare costs: If you have children, lenders may look at your bank statements to see how much you spend on childcare. This can help them assess your affordability for the mortgage.
- Gambling: Some lenders may view regular gambling transactions on your bank statements as a sign of financial instability, so it’s best to avoid these if possible.
- Bounced direct debits: This indicates that you may have difficulty managing your finances and could be seen as a red flag by lenders.
- Overdrafts: Lenders will look at whether you have exceeded your overdraft limit or have had any overdraft charges. This can be a sign that you are struggling financially.
- Undeclared credit commitments: Lenders may also look for any credit agreements that you have failed to declare, such as credit card balances or loans. This can impact your ability to afford mortgage payments and may be a factor in the lender’s decision.
- General account conduct: Lenders will assess how well you manage your bank account, including whether you keep a consistent balance and avoid any penalties or charges.
By ensuring that your bank statements reflect positive financial conduct, and by avoiding any negative financial behaviors, you can increase your chances of being approved for a mortgage.
How can my bank statements affect my mortgage application?
- Cash flow: If you’re self-employed, it’s a good idea to keep as many of your business transactions as possible flowing through your business account leading up to your mortgage application. This will make it easier for mortgage lenders to verify your income and assess your eligibility for a mortgage. Lenders will often cross-reference your most recent transactions to check that your income is broadly in line with what you declared on your tax returns for the previous year.
- BACS Payments: mortgage providers prefer to see a regular income that is paid directly into your bank account via BACS transfer, rather than in cash or by bank transfer. If your salary is paid in cash or by bank transfer, rather than BACS, this can raise questions for the mortgage provider, as it may be more difficult to verify that the income is consistent and reliable. In addition, mortgage providers may also want to see that your income is paid in on or within a few days of your payslip date, as this can help to demonstrate that your income is regular and dependable.
- Overdraft: While there’s nothing inherently wrong with having and using an overdraft, it can raise concerns for mortgage providers if you are regularly living hand-to-mouth and relying heavily on your overdraft to make ends meet. If you are always close to your overdraft limit, or regularly going over your limit, this can suggest to mortgage providers that you may be struggling financially
If you are concerned about the impact of your bank statements on your mortgage application, it’s a good idea to speak to a mortgage broker. A broker can review your bank statements and other financial information and provide guidance on whether it’s a good time to apply for a mortgage, or if you may be better off waiting until your financial situation is more stable or your bank statements look clearer.
Do I need to provide all my bank statements for all my accounts?
In short, no! Although mortgage providers have the option to request all of your bank statements, it is more common for them to only ask for specific ones.
Typically, they will request bank statements from your main account where your salary and bills are paid from, or any accounts where you are receiving income that will be used in the application process.
For self-employed individuals, lenders may request business bank statements to verify income, while for all applicants, lenders may ask for statements to evidence the deposit being used for the mortgage.
Do mortgage lenders accept online bank statements?
Yes, many mortgage lenders do accept online bank statements as long as they are saved in a PDF format and display your name and account details. This can make it easier for applicants to provide the necessary documentation for their mortgage application.
How do I access my online bank statements?
Here is a more detailed step-by-step guide on how to print your bank statements online:
Log in to your online banking account using your username and password.Once you have logged in, navigate to the section of your account where you can access your bank statements. This section may be labeled as ‘Documents’, ‘Statements’, or ‘Account Details’, depending on your bank.
Choose the date range for the bank statements you need. If you are applying for a mortgage, you will typically need to provide statements for the last 3-6 months.
Click on the ‘Download’ or ‘Print’ button to save the statements to your computer or phone.
Make sure to save the statements in PDF format to ensure that they are accepted by your mortgage lender.
If you are having trouble accessing your bank statements online, you can also request printed statements from your bank. However, this may take longer and may incur a fee.
How do I send bank statements to my mortgage lender?
Email is a common way to submit bank statements to mortgage lenders and brokers. It’s important to ensure that the statements are sent as password-protected PDF files to ensure the security of your personal information.
Many lenders and brokers also have secure online portals or document upload facilities where you can upload your statements safely and securely.
What do I do if my mortgage is rejected based on my bank statement conduct?
Here are some options to consider if your mortgage application is declined based on your bank account conduct:
Appeal the decision: If you believe that the lender has made an unfair decision, you can appeal the decision by providing additional evidence or clarifying any issues that were raised.
Try another mortgage lender: Different lenders have different criteria and may have more lenient policies when it comes to bank account conduct. Consider approaching a specialist lender who may be more open to your application.
Wait and reapply: Take some time to work on improving your bank account conduct by maintaining a healthy balance, avoiding overdrafts, and ensuring bills are paid on time. After a period of several months to a year, reapply for a mortgage with a clean record of bank statements.
How can I improve my chances?
Here are some tips to improve your chances of success on your mortgage application by presenting positive bank statements:
- Avoid gambling or any transactions related to it
- Stay within your overdraft limits and avoid going over it
- Avoid excessive spending, especially on luxury items
- Reduce high value purchases that may be seen as unnecessary
- Make sure all bills and payments are paid on time
- Limit the number of overdraft fees or bounced payments
- Show regular and consistent income deposits
- Minimise the number of credit commitments and repay them on time
- Keep your account conduct clean for at least 3-6 months prior to your application
How can Strive Mortgages help?
Working with an experienced mortgage broker like us can greatly increase your chances of success on your mortgage application.
Before we submit your application, we can review your bank statements and advise you on the best course of action to take based on your individual circumstances.
We can recommend which lenders you may be best suited to using and whether it’s worth applying or waiting until you have a period of clear bank statements.
This can save you time and money by avoiding unnecessary rejections or delays. Our expertise can help you to present your application in the best possible light, improving your chances of being approved.
Do mortgage lenders want to see my savings accounts?
While some mortgage lenders may request savings statements to evidence proof of deposit, it’s not a universal requirement. Some lenders may rely on the solicitor to verify the deposit or may request other forms of evidence, such as a gift letter or proof of sale of an asset. It’s always best to check with the specific lender or seek advice from a mortgage broker to see what documents are required for your individual circumstances.
Do mortgage underwriters look at what I spend my money on?
Mortgage lenders do review your bank statements to assess your financial behavior and spending habits. They analyse your statements to identify any red flags, such as bounced direct debits, overdrafts, excessive spending, or gambling, that could indicate poor money management or financial instability. The lender also looks at your income and outgoings to ensure that you can afford the mortgage.