22 Dec, 2018 | BANKSY
Most banks request for three months or more worth of bank statements to check ones income and expenses, but regulation rules states that such request is not mandatory. These extensive background checks help borrowers watching what they spend in the months leading up to an application and an odd payment could trigger a denied application.
Santander, Halifax and Virgin Money are some of the banks that have slowly moved away from requesting bank statements. Probably some of the reasons for this “new” approach is related not just with other financial tools available (such as credit scores, payslips, savings, investments and tax returns) but also due to the fact of the usage of fake bank statements by applicants in order to secure a loan. Santander has actually sent an email to brokers specifically requesting them not to send applicant’s bank statements unless asked and also added that if they want the statement to check a specific transaction, then only that specific page should be sent.
Apart from the reason of reliability when fake bank documents and fake bank statements can be produced also drilling in to statements mean more work for the bank because they can't "unsee" any "dodgy" payments. But many banks are quite about this because it could be seen as irresponsible lending and that is something they don’t want to encourage.
One broker warned that applicant’s shouldn't treat it as a "get out of jail card". Rachel Lummis from Xpress mortgages said: "The adviser will need bank statements for assessing affordability, proving income and compliance purposes and the lender fully expects the adviser to have them on file. "The solicitor will need them for anti-money laundering purposes and proof of deposit." A spokeswoman for Santander told Mortgage Solutions: "Brokers have fed back that there is sometimes uncertainty around the paperwork that is necessary for each application, resulting in additional paperwork being needlessly collated and submitted. "To support them, we sent an e-mail clarifying the paperwork requirements – one element of this was around securing applicant’s bank statements. As a prudent lender, we must always ensure the necessary affordability checks are carried out so that people get the product that meets their needs and can afford the mortgage for the length of the term. The communication was designed to help brokers collect what was needed for bespoke cases, enabling them to quickly and easily get the right decisions for the customer." A spokeswoman for Halifax said it doesn’t request for bank statements as the lenders use "a variety of financial ways and tools to assess a customer’s credit worthiness" including credit reports and scores.