Bank statements for mortgage pre-approval

Idjit

Myself and my partner have roughly 30k saved up and are looking at applying for mortgage pre-approval to see how much roughly we'd be offered.
They wish to see six months worth of bank statements as part of the application and I've seen in several places that they want to see clean transactions (free of gambling etc) and that there are no extravagant purchases.
Does anyone have any advice about other habits that will show up badly to the banks or financial institutions?

For example, I get coffee/breakfast some mornings and pay by card..would that seem extravagant? Every so often we go on cheap weekend trips to within Europe. Will the cost of the flights be taken into account or is the fact that there's flights paid for at all make us seem extravagant?

Are frequent cash withdrawals better than frequent contactless transactions?

Thanks for any help that anyone can provide,we're going around feeling guilty for living our lives at the moment!

SozBbz

The main thing that matters is that you can afford the amount of the monthly repayment each month for the past 6 months, at a stresstested interest rate (say =2% above the advertised rate). Do these weekends away mean you've very limited cash flow on those months in particular, or do you save ahead of time so your cash flow is more consistent? If its the latter, then I'd see no issue.

Also, make sure any loans are up to date and your credit cards are paid off. The amount of people who say they've X saved, but have loans and credit card debt to whatever level, so really they're just flattering themselves and those "savings" are not a true reflection of their financial position.

I really don't think a few coffees will make any difference if you can actually afford them. My frivolous spending never stopped me getting a mortgage anyway, because regardless of how trivial the things were that I was spending my money on (getting nails done, blowdrys etc) I was living within my means.

catrionanic

It's also important to show a regular fixed amount of savings each month, rather than saving €50 one month and €500 the next. Any withdrawals from a savings account are generally frowned upon, even if it is for a big one-off payment like a new car.

Idjit

SozBbz wrote: »

The main thing that matters is that you can afford the amount of the monthly repayment each month for the past 6 months, at a stresstested interest rate (say =2% above the advertised rate). Do these weekends away mean you've very limited cash flow on those months in particular, or do you save ahead of time so your cash flow is more consistent? If its the latter, then I'd see no issue.

Also, make sure any loans are up to date and your credit cards are paid off. The amount of people who say they've X saved, but have loans and credit card debt to whatever level, so really they're just flattering themselves and those "savings" are not a true reflection of their financial position.

I really don't think a few coffees will make any difference if you can actually afford them. My frivolous spending never stopped me getting a mortgage anyway, because regardless of how trivial the things were that I was spending my money on (getting nails done, blowdrys etc) I was living within my means.

Hi,
Thanks for this response. No credit cards or loans to our name and we put aside money each week in the lead-up to the trips, so we're not left broke afterwards. We've heard a lot of fear about how they look unfavourably on anything beyond a nuns manner of living but it's refreshing to hear that as long as we show we are living within our means that it shouldn't be an issue.

SozBbz

Jade182 wrote: »

Hi,
Thanks for this response. No credit cards or loans to our name and we put aside money each week in the lead-up to the trips, so we're not left broke afterwards. We've heard a lot of fear about how they look unfavourably on anything beyond a nuns manner of living but it's refreshing to hear that as long as we show we are living within our means that it shouldn't be an issue.

Nah its not that punitive in my experience. Its more about your accounts looking consistently healthy - you don't want any peaks or troughs, just steady growth of your savings.

Once you can demonstrate this, it doesnt really matter what you spend your disposable income on (once its not something addictive like gambling etc). You are allowed to have a life too, once its within your means.

Talk to your mortgage adviser and I'm sure they'll reassure you. They want to see that you can live normally whilst making repayments and wouldnt be adversely effected in rates were to rise. In my view, its only in that circumstance that you look at cutting back your coffees. Then you'll be glad to have fat to trim.

If you've no dependents/loans/other special circumtsances, the online calculators should give you a good idea of what you can borrow.

I got my mortgage from BOI in 2015 by the way.

fg1406

We had to supply 12 months savings statements as well as 6 month current account statements for our application. We have a take away once a week and dine out once a month and that wasn't an issue. Also I had a large sum withdrawal from my savings (€15k) to pay for a car within 13 months of our mortgage application and we told the bank what it was before they asked (and held anything up) and it wasn't an issue.

Bob24

I think what they want to see is that:
- your salary is indeed being paid to the account
- if you are renting, confirm the rent amount from the statements
- make sure you are not constantly overdraft or struggling financially
- understand what large credit/debit transactions on your account correspond to (for exemple if you received a large amount of money they will ask you what it is and if for exemple it is a donation from family toward a deposit, they will want written confirmation form that person that the amount is a gift and not meant to be paid back)
- you didn't hide any relevant information from them (for exemple if you say you are debt free they'll make sure there are no mortgage repayments comming out of your account)

So it's all mostly technical stuff to build your high level financial profile - they want to have string confidence about how much your current lifestyle is costing you and therefore what your repayment capacity is based on that. How exactly you spend your money is not that relevant to them except from obviously risky things (I guess it for some reason the statements show you are compulsive gambler they will thing twice, but they don't if you have a habit of drinking very fine and expensive coffee everyday as long as you can afford it and overall your budget is healthy).

Idjit

Thanks for the responses everyone, it's going a long way to settling our fears!