"The credit report might provide information on the status of their credit, but bank statements will help underwriters to understand the client’s current financial position"
This is a common question from brokers who are used to working with high street lenders that use credit scores to make lending decisions.
The reason is straightforward. Lending decisions at specialist lenders are made by underwriters, based on the individual circumstances of every client application, and bank statements provide the vital evidence to inform these decisions.
For clients who have experienced recent credit issues, such as CCJs or defaults, the credit report might provide information on the status of their credit, but bank statements will help underwriters to understand the client’s current financial position and whether the mortgage will be affordable and sustainable.
It’s this ability to look beyond the binary information of a credit report and interpret a client’s financial behaviour that gives specialist lenders the confidence to make positive lending decisions to people who may have adverse credit registered to their name as little as six months prior to making an application.
The good news is, if bank statements are supplied promptly, the process of underwriters reviewing those bank statements doesn’t necessarily have to result in a delay from application to offer.
Pepper Money recently completed a mortgage for a client who was buying a new-build property as well as raising money for debt consolidation.
The client had some previous credit issues and didn’t fit the high street, so the broker had originally placed her case with another specialist lender. Unfortunately, that lender withdrew from the market and cancelled all cases that hadn’t proceeded to offer, and so the client was left in a very difficult position as she was under time pressure to complete the purchase of the new build property and also had a chain on the property that she was selling.
With time of the essence to prevent her purchase falling through and the chain collapsing, Pepper Money were able to issue an offer to the client just one week from receiving the application and the mortgage completed the following week.
So, bank statements help lenders to build a picture of your client’s financial profile, but this process doesn’t necessarily have to result in longer processing times. If you are able to provide the bank statements requested by your lender as soon as possible, you can be sure that your lender will have the people and processes in place to review those bank statements and progress the application without delay.
