Mortgages | Applying for a mortgage | Barclays (2024)

FAQs

What not to say to a mortgage lender? ›

Several factors could keep you from getting a mortgage, including a low credit score or income, high debts, a spotty employment history and an insufficient down payment.

During the mortgage loan application process, lenders will usually want to see 2 to 3 months' worth of checking and savings account statements. They will review these statements to confirm your income and expense history and ensure you'll be able to make your mortgage payments.

What Underwriters Don't Want to See in Your Bank Statements. Red flags that signal potential issues with your current debts, rent payments, or spending habits, include overdrafts, unexplained withdrawals, and unusual deposits.

Under the Red Flags Rules, financial institutions and creditors must develop a written program that identifies and detects the relevant warning signs – or “red flags” – of identity theft.

Your debt-to-income ratio – or how much debt you're paying off each month in comparison to how much money you're making – is just one factor that lenders look at when reviewing your mortgage application. If it's above a certain threshold (typically 43%), you'll be considered a risky borrower.

Mortgage lenders primarily review your financial documents, including bank statements, during the initial stages of the loan application and underwriting process. This is when they assess your creditworthiness, debt-to-income ratio, and other financial aspects to determine your eligibility for a mortgage.

A lender may occasionally ask for three months of bank statements, or a full quarter, to verify income and check on the status of your incoming money. However, two months' worth is often enough for them to dig into the financials and figure out whether you're capable of paying off the mortgage.

How far back do lenders look at bank statements? Mortgage lenders typically seek two months of recent bank statements during your home loan application process. You need to provide bank statements for any accounts holding funds you'll use to qualify for the loan, including money market, checking, and savings accounts.

Mortgage lenders want to see that you are living within your means and that you are not spending more than you can afford. They will also look at your debt-to-income ratio to determine if you are able to handle the payments on a mortgage.

What lenders do not check bank statements? ›

Some lenders including Santander, Halifax and Virgin Money have told borrowers that they do not want to see bank statements.

Your bank statement will also reflect whether you have the funds available to go through the process of a mortgage application; considering things such as the deposit (which may need to be traced), fees and the move itself.

Lenders ask questions to assess your risk level as a potential borrower. Lenders aren't allowed to ask questions regarding sexual orientation, medical history, disabilities, political or religious beliefs and plans for family expansion.

Debt-to-income ratio is high

A major reason lenders reject borrowers is the debt-to-income ratio (DTI) of the borrowers. Simply, a debt-to-income ratio compares one's debt obligations to his/her gross income on a monthly basis. So if you earn $5,000 per month and your debt's monthly payment is $2,000, your DTI is 40%.

Poor communication, or a lack of responsiveness, is the most common complaint in the mortgage lending process.