/ house buying

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Indy - on 17 Feb 2013
Got the nephew around this weekend. He's looking to buy a flat and has been to the bank to enquire about getting a mortgage.

One of the requirements in getting a mortgage is to show the bank 3 months worth of bank statements. Its been a long while since we went through the the process so have been unable to answer why the bank requires this and what are they looking for?

He's managed to save a good 15/20% deposit so his current account looks a bit sorry for itself pretty much only having his current living expenses in it and getting close to zero at the end of each month.

Will this effect his application?
rossh - on 17 Feb 2013
In reply to Indy:

I suspect all they are looking for is evidence of a regular income so that they can have confidence that the monthly repayments will be met. They may also want to check that your nephew has no other substantial monthly financial commitments that could affect his ability to meet the repayments. I never keep much in my current account and always approach zero at the end of the month and this has never caused any problems when applying for a mortgage.
John_Hat - on 17 Feb 2013
In reply to Indy:

As others said, they are looking for income and expenses, not riches.

On the good side, it would indicate that they are going the "affordability" route rather than a strict 3.5x income route, so if his finances are in order (and the fact he has managed to save so much indicates they are) then he may end up with a better rate or ability to borrow more.

In any case, anyone with any kind of capital is not going to keep it in a current account.

For what its worth our current account oscillates around zero, going from +1k at the beginning of the month to -1k at the end, and it bothers our bank not at all.
elsewhere on 17 Feb 2013
In reply to Indy:
include savings statement to show he's regular saver and a good risk rather than an irresponsible beneficiary of a rich uncle!
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hokkyokusei - on 17 Feb 2013
In reply to John_Hat:
> (In reply to Indy)
>
> As others said, they are looking for income and expenses, not riches.
>
> On the good side, it would indicate that they are going the "affordability" route rather than a strict 3.5x income route, so if his finances are in order (and the fact he has managed to save so much indicates they are) then he may end up with a better rate or ability to borrow more.

I've just been through the mortgage mill and can confirm that lenders are not just interested in how much income you have - they want to know what you do with at all too!

To the OP by all means shop around for your mortgage (I found HSBC to be the cheapest for me), but in the main your interest rate is dependant on how much deposit you can scrape together.

Be wary of slightly cheaper interest rates that you need to pay a fee for. Do the sums and workout if that's actually going to be cheaper over the term you're likely to have the mortgage for.


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