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A guide to bank statements for a mortgage

When applying for a mortgage, your mortgage lender will ask you for a variety of documents to prove your identity and affordability.

When applying for a mortgage, as part of your affordability assessment, your mortgage lender will ask you to provide your last 3 months’ bank statements.

Below we explain why mortgage lenders require bank statements and what they look for when they check your bank statements.

In this guide, our advisors give their expert opinion and advice about bank statements and how they are linked to your chances of being accepted for a mortgage.

Why does a mortgage lender want to see my bank statements?

Mortgage lenders will often be willing to lend to you, provided you have the means to afford your mortgage payments.

If a lender suspects you won’t be able to afford a mortgage, perhaps because your income isn’t sufficient or because you have a lot of other outgoings, they might decline your application.

It’s been our observation that if your finances are healthy and you are in control of your spending, you improve your chances of a successful mortgage application.

Your bank statements will indicate the status of your financial position so this is why your lender will ask to see them.

How many bank statements will my mortgage lender require?

Before you make your mortgage application, you should pull together all the paperwork that is needed. As part of this paperwork, you need to retrieve your latest bank statements. But how many statements will you be asked to provide?

Employed

If you’re employed, your mortgage lender will likely ask to see your last 2-3 months’ bank statements. However, we have experienced that you might also be asked to provide up to 6 months of bank statements in certain circumstances so you should have these ready, just in case.

Alongside your bank statements, you will also be asked to provide your most recent payslips and your P60 documents from the last two years as these are also used to assess your affordability.

Self-employed

If you’re looking to get a mortgage while self-employed, you will be asked to provide bank statements that cover the last 3-6 months.

As proof of income, you will also be asked to provide your past three years’ worth of accounts (certified by an accountant) and SA302 tax calculations.

What do lenders look for on bank statements for mortgages?

When looking at your bank statements, your mortgage lender will look for anything that can verify your income and affordability.

Specifically, this will include:

  • The amount, source, and frequency of your income
  • Your regular outgoings, such as bill and loan payments, childcare costs, and other common expenses
  • The availability of funds for your mortgage down payment and closing costs
  • The source of your mortgage deposit (down payment), such as a gifted deposit from a family member

Your mortgage lender will also look for any risk factors within your bank statements, such as:

  • Evidence of gambling
  • Evidence of fraud and money laundering
  • Difficult to-trace overseas savings
  • Payments to payday loans
  • Bounced direct debits
  • Irresponsible spending habits

Your mortgage chances will be improved if:

  • Your debt-to-income ratio isn’t overly high
  • There are no risk factors
  • You have sufficient funds for your mortgage loan (including fees and closing costs)

If you think there is something on your bank statements that your mortgage lenders won’t like, it’s advisable to delay your application until your bank statements are clear of red flags. Alternatively, if you are keen to apply for a mortgage, you could speak to a mortgage broker, such as our mortgage company, as we have access to specialist lenders that may overlook certain issues on your statements.

How can my bank statements affect my mortgage application?

Before applying for a mortgage, you need to make sure that you’re mortgage ready. By this, we mean getting yourself into a position where your application will be approved.

Your bank statements play a large part in your mortgage application, as you can see below.

1. Red flags can trigger mortgage rejection

If there is anything on your bank statement that points to fraudulent activity (such as untraceable cash deposits) or if there is evidence of multiple credit card payments (and other types of loans, such as payday loans), your mortgage application might be declined.

2. A healthy income can improve your mortgage chances

Most lenders will cross-reference your bank statements with your payslips and P60s when assessing the frequency and amount of your income. The more you earn, the more you can typically borrow, providing your spending habits aren’t out of control.

3. Lenders can work out your debt-to-income ratio from your statements

Your debt-to-income ratio reflects the proportion of your income that is used to pay off your existing debts, such as credit card debt and car finance. Your bank statements can evidence your income and your recurring monthly debt payments so your lender might use these when calculating your debt-to-income ratio.

The smaller the ratio the better, not only to improve your chances of a successful application but to encourage lenders to offer you better mortgage deals.

Do I need to provide bank statements from all of my bank accounts?

In short, no! You only need to provide statements for the account (s) that provide evidence of the income, deposit, and cash reserves that you are using as evidence of your mortgage affordability. If you have any bank accounts that hold no evidence of your affordability for a mortgage, you don’t need to retrieve bank statements from these.

How do I access my bank statements?

It’s easy to access your bank statements if you have online banking.

  • Log into your account
  • Locate the tab labelled ‘Documents’ or ‘Statements’ on the home screen or ‘Account Details’ screen
  • Enter the dates of the bank statements you are looking for – for your mortgage, these should cover the last 3-6 months
  • Save your statements as PDF documents on your computer or phone.

Read our detailed guide on how to download and print online bank statements.

If you don’t have online banking, speak to a representative at your local bank.

How do I submit my bank statements to my mortgage lender?

Most mortgage lenders will accept PDFs of your bank statements, so if you have downloaded these from your online bank account, you can email these as attachments to your lender.

Some lenders will require hard copies of your bank statements, so in this eventuality, you should download and print these and send them to your lender, or ask your bank to forward them to your mortgage provider.

What happens if a bank statement issue results in a mortgage rejection?

If there are any issues on your bank statements we have examples that lenders will usually ask for clarification. As such, your application won’t necessarily be rejected outright if they do spot something they’re not sure about.

But if an issue does lead to mortgage rejection, don’t panic!

You should look for solutions to the bank statement issues before you make another application. This will reduce the chances of your application being declined again. A mortgage broker can advise on these.

A mortgage broker can also:

  • Put you in touch with a specialist lender who will overlook certain issues and potentially grant you mortgage approval
  • Give you the mortgage advice you need to improve your chances of a successful application the next time you apply for a mortgage
  • Appeal against the lender’s rejection decision if they think there are grounds to do so

If you have had your mortgage declined because of a bank statement issue, get in touch with our expert team for FEE-FREE advice and support.

How can I improve my mortgage chances?

There are all kinds of ways to improve your mortgage chances, from increasing your mortgage down payment to taking steps to improve your credit score if you have a history of bad credit.

Supplementing your employment income with money earned from investments, such as rental income, can also help, as most banks and building societies will accept this as part of your overall income.

When it comes to your bank statements, you can improve your mortgage chances by:

  • Curbing bad spending habits
  • Avoiding new loans
  • Restricting large purchases
  • Reducing your bill payments

By taking these steps, you will both improve your financial position and eliminate potential red flags that might show up on your statements.

How YesCanDo Money can help

If you’re looking for advice on bank statements for mortgage applications, contact an online mortgage advisor at YesCanDo Money today.

Our mortgage brokers have many years of experience and can provide mortgage advice on the paperwork you will need for a mortgage and can let you know what lenders look for when browsing through your various documents.

If you have been rejected for a mortgage before, we can look at the reasons why with you, and give you advice to improve your chances of mortgage approval the next time around. Reasons for mortgage rejection could include issues with your credit report as well as problems with your statements, and there could be other reasons why you haven’t met the lender criteria. We will have come across most scenarios and will consider all possibilities and advise you accordingly.

For advice on all aspects of the home loan process, get in touch with us about your mortgage online. We are experts in a wide range of different mortgage subjects, so no matter your mortgage needs, we are here to help you. Send us a WhatsApp and let’s see if we can help!

FAQs

If you’re employed rather than self-employed, your mortgage lender will usually ask you for at least 3 months worth of wage slips. These will be in addition to your bank statements, P60s, and evidence of any bonuses.

If you are in self-employment, you will need to provide other proof of your cash flow and approximate annual income. This will include 2-3 years of accounts for your business, 2-3 years of your personal tax returns (such as your SA302 documents), and your recent bank statements.

If you have only just started work and have no payslips to give to your lender, you may still be able to get a mortgage. Your lender will want to see your employment contract to confirm that you have a full-time job and to get an idea of your future income.

Yes, as they want to make sure you are not living beyond your means and that you are a reliable borrower. So, they will look at how much you spend on credit cards, groceries, entertainment, and your bills, among other things. If you are spending more than you earn, or if there is evidence of excessive gambling or evidence of other loans on your bank statement, such as payments made to a payday loan, you may not get your mortgage approved.

Not every mortgage lender will reject your mortgage application if your credit score is low but there are some that will. For those that do accept you for a mortgage, you will likely be ruled out of the best mortgage deals on the market because of your low credit rating.

To improve your chances of a successful application, with a deal that guarantees you lower mortgage payments, you should check your credit report for any errors or issues and then take steps to improve your credit score. With very few mortgage providers lending to customers with a low credit score, the sooner you improve your rating the better.

If you have any cash reserves, such as money held within a savings account, you should disclose these to the lender as your savings may increase your chances of a better mortgage deal with lower monthly payments.

As such, you should provide the relevant account statements to your lender as evidence of your financial situation.

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Steve Roberts
Steve Roberts

Stephen Roberts MAQ is the founder of YesCanDo Money, one of the UK's largest no-fee mortgage brokers. With over 30 years of mortgage experience, he has advised and helped thousands of first-time buyers buy their first home and home movers buy their dream home. Speak to a mortgage expert today by completing our contact form:

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