Your credit score might be excellent, but lenders often decline applications based on subtle red flags in your bank statements. Our checklist breaks down the four things mortgage underwriters scrutinise most closely when checking your bank account history.
1. Big, unexplained transactions
Underwriters flag any large, irregular cash deposits or transfers, especially in the last three to six months. This includes movements that do not match your usual income or large, sudden sums of money.
Top tip: If you have irregular income, be prepared to provide evidence and clear explanations. Clean bank statements signal lower risk to the lender.
2. Missed or late payments
Your payment history is the single most important factor in your credit profile. Even small, accidental late payments on credit cards or utilities can seriously damage your score.
Top tip: Check your credit report now for any late or missed payments in the last 12 months. Set up direct debits for all your monthly bills to guarantee you pay on time.
3. Hidden costs for dependants (like children)
Lenders need a complete picture of your financial responsibilities. They factor in all forms of childcare, maintenance payments, and other legal commitments that affect your disposable income.
Top tip: Be honest and accurate when calculating your overall monthly expenses for your application. Providing incorrect information jeopardises your approval and could have serious legal consequences.
4. Lack of proof for gifted deposits
If you’re receiving a large deposit towards your first home, the lender will need to see a clear paper trail and legal confirmation that the money is a non-repayable gift.
Top tip: Ask the gift-giver to sign a gifted deposit letter – it’s easy to find a template letter online. Make sure the money is visible in your personal bank account statements before you apply. Finally, be prepared to ask the gift-giver to share their own bank statements as proof.