When a lender is assessing your bank statements, you can expect them to look for a variety of things. Their primary goal is to determine whether you are the sort of person who manages money responsibly and is likely to keep up to date with their mortgage payments.
In recent months, applicants are asking one question quite a lot: “do gambling transactions look bad on my bank statements?”.
There is nothing illegal about properly licensed gambling, do not panic if you’ve had an annual flutter on the grand national or extensively used internet betting sites. After all, a lot of people see gambling simply as a mainstream hobby or pastime like many others.
That said, as the advertising urges customers to “please gamble responsibly” this is a key point to bear in mind when applying for a mortgage. It is not a lender’s job to tell you how to live your life, how to spend your money, or indeed to moralise on the ethical rights and wrongs of gambling. But they do have a duty (underscored by mortgage regulation) to lend responsibly.
If lenders need to prove to the regulators that they are making sensible lending decisions, it is not entirely unreasonable of them to expect the people to whom they lend to adopt a similar approach when it comes to their personal finances. Look at it from this perspective, if you were lending your own money would you lend it to someone with a serious gambling addiction?
As mentioned above, it is not illegal to gamble so just because you have the odd gambling transaction on your bank statements it doesn’t automatically mean you will be declined for a mortgage. However, the lender will consider whether these transactions are reasonable and responsible. Thus they will particularly look at the frequency of these transactions and the size of the transactions in relation to the person’s income.
As stated above, it is not illegal to have gambling transactions on your bank statements and it does not mean you will be declined straightaway for a mortgage. The lender will examine whether these transactions are justified and responsible.
They will do so by looking at the frequency of these transactions, the size of the transactions in relation to the person’s income, and the impact on the account balance.
So, if your transactions are infrequent tiny amounts that make no significant impact on a regular credit bank balance, then they are not likely to be a red flag. However, if you bet most days or are constantly overdrawn, the lender is therefore likely to see that as being irresponsible and decline your application.
Lenders look at your bank statements to see how you manage your money, to help them establish whether this gives them either the confidence that you are financially prudent or the evidence that you are not.
For example, having an overdraft facility and occasionally using it, is not inherently a bad thing; regularly exceeding the overdraft limit – not so good. This is why lenders will look for excess overdraft fees or boucned direct debits because these would normally show that the account is not being well conducted.
Other things to look out for include credit transactions from pay-day loan companies; “undisclosed” loan repayments (i.e. if you said on the application that you have no other loans but there appear to be regular loan payments, this could be a problem); they would look out for any obvious missed payments.
Finally, they might also consider how much of a typical month is spent overdrawn, for example, if you only just go into credit on payday and for the rest of the month are overdrawn, how sustainable is this mortgage?
Remember to be sensible and, if possible, plan ahead. Typically, a bank would ask for up to three months of your most recent bank statements. These will show your salary credits and all your regular bill payments.
Therefore, if you know you’re likely to want to apply for a mortgage in the not-too-distant future, try to make sure that you avoid any of the above pitfalls. Take a break from gambling for a short while and work on presenting your bank account in the best possible way.
If you are a First Time Buyer in Hull who may find the entire process a little bit daunting, or you have a complex case and need to speak with a Specialist Mortgage Advisor in Hull, our team can guide you through the whole mortgage process and help you with your application and get you on track.
We are here to provide mortgage advice 7 days a week, always on hand to answer your mortgage questions. We can’t wait to help you out with your mortgage journey. Get in touch with us and book yourself in for a free mortgage appointment to speak with one of our Mortgage Advisors in Hull today.
Last Edited 01/08/2022