Having mortgage applications declined will add more searches onto your credit file, so you are better to get an idea of where you stand financially before you apply for one. Getting help for gambling addiction If gambling could prevent you from getting a mortgage application, then it is definitely time to get help. The key question you should. Hate to be the bearer of bad news but more than likely they will decline your mortgage. Most if not all will decline with even a sniff of gambling on statements unfortunately. I had to use the Halifax as they at they dont ask for bank statements. Could be an idea for you unless their policies have changed. Though mortgage lending was up a big 38% from 2011, there will still thousands of declined mortgage applications. In fact, the top mortgage lender in the United States, Wells Fargo, denied 84,687 of the 399,911 home purchase applications it received (21.2% rejection rate), including those that were pre-approved, according to a Marketwatch analysis. Why mortgage applications are declined and what to do next If your mortgage application gets declined, there are a number of things you can do to improve your chances of getting approved next time. Don’t rush off to another lender as each application could show up on your credit file. In 2018, mortgage originations declined due to new regulations, rising rates and softening housing markets resulting in the slowest year-over-year growth rate of outstanding mortgages in more than.
Bank statements provide lenders an insight into the lives of prospective borrowers, but some activities could result in an application unexpectedly being turned down.
Providers are looking for any clues that customers may struggle to keep up with repayments in the future.
Here are the bank statement activities that brokers say act as a red flag to lenders, and at the worst, mean applications are rejected.
1) Gambling habits
Bank statements detailing payments to bookies can instantly stop an application in its tracks, brokers warned – even when the borrower is an otherwise perfect candidate.
Bank statements detailing payments to bookies can instantly stop an application in its tracks, brokers warned – even when the borrower is an otherwise perfect candidate.
Malcolm Davidson, managing director at mortgage broker UK Moneyman, told us of a case in which one of his clients had a perfect credit history, but a prospective lender identified a gambling habit on bank statements.
Davidson said: “It was really the type of customer that any lender would normally lend to. They gambled with their own money and there was no overdraft.”
After requesting more information, the lender eventually declined the case. Davidson said the client had effectively been punished for their choice of vice.
Rachel Lummis from Xpress mortgages agreed gambling transactions cause problems.
She said: “Many of us like a flutter on the grand national – that won’t affect you – but if you have daily amounts going out to companies, such as Bet Fair or Ladbrokes then that can cause an issue.”
2) Being overdrawn
Dipping into overdrafts could suggest a prospective borrower struggles to manage their money effectively and this will set alarm bells ringing for lenders.
Dipping into overdrafts could suggest a prospective borrower struggles to manage their money effectively and this will set alarm bells ringing for lenders.
Lummis said: “A rather common mistake is when a bank offers you that service of letting you go overdrawn, however as long as you make payment by the afternoon then it is fine.
“That is rather generous of them and you are playing by the rules but on your statement, it will show those several transactions as over your overdraft.
“The fact that it’s sorted by the end of the day and accepted by your bank doesn’t matter.
“Other lenders will see this as going over your overdraft limit and if you do this frequently that’s enough for your mortgage to be declined.”
3) Payday loans
Nick Morrey, product technical manager at John Charcol, said payday loans will raise problems with any mainstream lender.
Nick Morrey, product technical manager at John Charcol, said payday loans will raise problems with any mainstream lender.
He added: “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 the account holder has not had enough funds in their account at the end of the month is another stumbling block, Davidson advised.
4) Unexplained cash deposits
Regular payments from family and friends could be viewed as a financial commitment and affect overall affordability, Morrey warned.
Regular payments from family and friends could be viewed as a financial commitment and affect overall affordability, Morrey warned.
Borrowers will also need to have a reasonable explanation for any unusual payments or larger payments.
One-off cash payments can raise fears among lenders over money laundering.
And those who gift part of deposits to borrowers, will often need to provide proof of wealth, Davidson said.
5) Bank statement jokes
Joke references to friends or family can cause problems, according to brokers.
Joke references to friends or family can cause problems, according to brokers.
Mortgage Declined Due To Gambling Money
Lummis said: “A bit of light-hearted banter should not be played out on your bank statements.
“A lender doesn’t want to see a friend paying you back for that meal you had last week, with a crude entry that says ‘payment for drugs’ or ‘sex last night’.”
6) Suggestive card payments
Davidson told of a case where the lender spotted a one-off payment to Mamas & Papas.
Davidson told of a case where the lender spotted a one-off payment to Mamas & Papas.
The lender then went on to ask if the borrower was pregnant, which could impact their affordability further down the line.
One way for borrowers to avoid bank statements falling foul of lender underwriting is to shift the majority of spending to a credit card in the run-up to submitting an application, which is then paid off in full each month.
Alternatively switching some payments, such as gambling, to cash could also help ease applications through.
Being declined a mortgage is more than disheartening.
It’s a major setback because it will hamper all other applications you make shortly after being declined.
For a large loan product, it’s advisable that only two applications be made in the same year. With such a low application ratio, it’s definitely worth your while to take your time in choosing a lender and taking steps to ensure the application stands a good chance before you submit it.
4 Considerations for a Clean Mortgage Application
1 – No gambling transactions on your bank statement
Banks tend to check the last 6 months of your bank statement, if not going back a year. If there are large amounts or multiple smaller amounts going to online gambling sites, it might put your application under more scrutiny.
Gambling is considered risky, but only when it’s considered problem gambling. One user on the GamCare forum board writes about how the bank manager called him on the phone after noticing transactions to a gaming website. That goes to show you that there are many variables considered during the application process. Even with a stellar credit rating, the transactions on your bank statements could call for more scrutiny being put on your financials.
If you feel your bets are getting worrisome, get advice.
“The Gordon Moody Association, which treats the most serious addicts, estimates that they “will have severely affected the lives of at least 15 others in order to support their gambling”.
~ Neasa MacErlean: Independent.co.uk
For those affected by others, GamCare has a support and advice page for those affected by problem gambling.
One of the first problem gambling reports to be published by the Gambling Commission polled 4,000 people in Wales, which identified 1.1% of respondents as problem gamblers with a further 3.8% of all respondents being identified as low to moderate risk of problem gambling.
For Britain as a whole, The Independent reports that up to 3.5M people across the UK are in the at-risk category of problem gambling.
2 – Lenders are Scared of the Self-Employed
A few years back, the Self-Employed could easily get a mortgage through self-certification. These were no proof required loans, which led to this type of loan being dubbed the liar’s loan because it was easily manipulated. Now they’re banned.
Most lenders are going to scrutinise a mortgage application when it’s from someone who is self-employed. It makes them nervous because there’s income fluctuation. Lenders are extremely insecure and the self-employed scare them.
Your challenge to get an approval on a mortgage is to convince them that you’re a safe lender.
A couple of things that can help lenders feel more comfortable approving a Self-Employed mortgage:
Don’t do your accounts yourself
Have an accountant, preferably a Chartered Accountant, as that gives proof that your accounts are above board, and documented by a professional who stands behind your figures. It’s no longer based on your version of your accounts, which can be manipulated in many a way.
Request a copy of Form SA302 from HMRC
This form is a back up to support your claims made about your accounts, which preferably should be done by an accountant, but if you’re comfortable taking care of your own self-employed tax returns, you’ll definitely need this form. It’s a verification method in place to let lenders know that what you state is your income, is the same as what’s declared to HMRC.
Buckley’s Chartered Accountants have explanatory guidance on what’s needed and how to access the form using your HMRC online credentials.
3 – Review your spending habits
Chances are you aren’t looking too closely at your bank statements every month. That’s something you should be doing before applying for a mortgage because lenders will review your spending habits.
When asked for copies of your recent bank statements, this is why and not to verify your income. It’s to review your spending. They want to see you can afford the payments based on your income and not supported by Mum and Dad’s FPI payments to keep you afloat.
Look over your recent bank statements and see where your money is going. If (or when) you notice you could be developing better spending habits, refer to James Coney’s advice on This Is Money about spring cleaning your finances.
Mortgage Declined Due To Gambling Losses
4 – Setup Your Accounts to Never Miss a Payment
Mortgage Declined Due To Gambling Winnings
People forget and that’s a real problem when it’s a payment to be made from your Current Account. That’s bad and is reflected by a lenders decision to refuse an application due to payment defaults, especially if it happens regularly.
If you’ve a tendency to forget how much is needed and when, there’s a fool proof way to make sure you never miss a payment again. What you need to do is set up a new Savings Account with the same bank you hold your Current Account with, and then have the bank link the two accounts. That way when your Current Account is short of funds, the shortfall that would result in the transaction failing and the payment missed, the amount your short of will be taken from your linked savings account ensuring the payment is made on time.
Mortgage Declined Due To Gambling Rules
If you work with PayPal, you’ll know that if you don’t have the money in your PayPal balance, payments can be still be made automatically using your bank account as that’s your back-up funding source.
You can have your bank do the same with a Current and Savings account. Setup a backup funding source. That’s only useful if there are enough funds in it though so it would be best to work out how much your total Direct Debits and Standing Orders are, and then keep that amount in your Savings Account. If it is dipped into, top it up by the amount that was used. Then you’ll always have at least enough to pay a month’s worth of Direct Debits and any Standing Orders you have.
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