What do banks like to see on bank statements?

[JuddsABlue]

I guess this is more for mortgage insurance, but just looking for an overall opinion

Recently applied for a home loan with 18% deposit (377k purchase price 402k with stamp duty etc, 70k deposit)

The loan was approved but the mortgage insurance was not. We then put in a 20% deposit however the bank wasnt comfortable. Currently in the process of applying with a new bank with 20% deposit though I dont really think it'll work (just because of the knock back, doesnt feel right)

Anyway

So I was saving every week for 1 year total, but over chirstmas and jan I stopped saving because basically I was at the point of applying and had what I wanted. When I say saving, I mean moving money into a seperate account etc (the amount I was moving was a touch smaller than the weekly repayments of the mortgage, however I had current rent costs which I paid cash), I stopped doing this over Chistmas but my spending didnt increase.

I guess the major problem is my bank statement is a pretty messy thing. Lots of large cash withdrawls, resturant transactions, online punting deposits and withdrawls, 3 direct debits etc. Random cash deposits in branchs of 2k upwards etc. I also went on a holiday in November that cost around 9k

I feel that this might have given the mortgage insurer an uneasy feeling. Also the statement that they saw only covered from October to now, so they saw the holiday and Christmas period but really didnt see the solid saving from a year before that.

So basically, what do banks like to see? If the current application doesnt work then I'll take it easy for another 8-12 months and make sure my bank statement is much cleaner and re apply, but looking for some advice on the big dos and donts when it comes to a bank account

 

[Micksy]

They don't like to see lump sum deposits. Ie: Tax returns.

They need to see a steady flow of cash into the account.

They're trying to work out if you can make the repayments.

I don't think they care if you have TAB withdrawals.

 

[Visions]

Did the original bank give you an reason as to why it was rejected from LMI? Seriously with an 18% deposit, it would take something really bad for them to reject it. Are you sure that it wasn't something else, maybe to do with your credit file?

In a perfect world with the 3 months of statements the bank asks for, they like to see a decent savings effort which doesn't decrease, but I've had clients who had statements that have been a mess like yours (the biggest worry would be the online punting deposits, not a favorite with lenders) and have had loans approved at 90%. You just need to mitigate the major withdrawals with explanations. Lenders know that Christmas period is expensive and will give leeway with decent explanations. Also with a huge deposit like yours, there are lenders out there who don't care where the money came from, so aren't as pedantic and picky about the statements.

The issue now with the LMI rejection, is if you apply with a lender who uses the same LMI provider and it goes to LMI, then it will be automatically declined. You should choose a lender who has their own Designated Underwriting Approval (DUA) which means if the lender approves the loan, then it is automatically approved by LMI as part of the lenders authority.

 

[JuddsABlue]

Met with broker today who said the reason for LMI rejection was too many cash withdrawls

Im a cash person, I withdrawl a lot and will often redeposit later if I have excess on me

The lender then said they werent comfortable even with 20% deposit even though they origanlly approved the loan

Made a new application today with 20% deposit at a different bank so fingers crossed

 

[Visions]

The same lender wouldn't accept the 20% deposit because despite you not being in LMI payable territory (under 80% LVR the lender pays LMI), they would still need final approval from LMI and that would not be forthcoming due to it already being rejected.

Hopefully you have better luck with the second bank and your broker put in an "explanation" for your first application.

 

[Pilchard_Adams]

What size deposit is generally needed to avoid Mortgage Insurance?

 

[Scotland]

Typically banks will lend anywhere up to 90-95% of the property value and a 20% deposit is required to avoid paying LMI.

 

[Visions]

Yep, 20% deposit will avoid LMI, though some lenders will waive it at 85% LVR.

 

[Pilchard_Adams]

20% is pretty steep. It should be optional really. The bank will get their money if someone defaults on their loan as the bank will simply repossess and sell. Someone wanting to build a decent size family home needs around $80,000 deposit now days... 180k for land, 220k for house. Its tough enough for someone to work, pay rent/mortgage/bills/car and save 80k to build a house as it is. Then add on the 15k or so for Stamp Duty here in SA.

 

[Visions]

20% is pretty steep. It should be optional really. The bank will get their money if someone defaults on their loan as the bank will simply repossess and sell. Someone wanting to build a decent size family home needs around $80,000 deposit now days... 180k for land, 220k for house. Its tough enough for someone to work, pay rent/mortgage/bills/car and save 80k to build a house as it is. Then add on the 15k or so for Stamp Duty here in SA.

That is the last thing the banks wants to do, as they are not in the business of selling houses. Will cost them legals, agent fees, etc, and if the property market has nosedived, they can't exactly leave the house on the market until things "pick up". Sure LMI will pay them for any shortfall but they perceive it as a pain in the ass.

What many people don't realise is that LMI is charged on all loans, not just those over 80% LVR, the difference is the lender pays the LMI on your behalf for loans under 80%.

 

[JuddsABlue]

Still yet to hear from the ANZ, its been a week now.

Our broker said no news can be good news but not really sure what she meant by that?

Either way getting frustrating. The vendor didnt extend the contract so techincally we arent in one any more and the house is his to do what he wants but hes hinting its still ours if we can get approval/unconditional pretty soon but that window is closing

Frustrating process, especially since I have more liquid cash + deposit, higher income with no debt and no bad credit than people I know who have been able to get loans with 5% deposit etc but I'm having major troubles

 

[Lensen]

That is the last thing the banks wants to do, as they are not in the business of selling houses. Will cost them legals, agent fees, etc, and if the property market has nosedived, they can't exactly leave the house on the market until things "pick up". Sure LMI will pay them for any shortfall but they perceive it as a pain in the arse.

What many people don't realise is that LMI is charged on all loans, not just those over 80% LVR, the difference is the lender pays the LMI on your behalf for loans under 80%.

What

No it isn't. Not at any of the two big 4 banks I've worked at

 

[JuddsABlue]

Loan was approved which was good, 20% deposit and didnt need to provide proof of savings etc

 

[Dan Moody]

I work for one of the big 4 and was going to suggest ANZ as their lending criteria is a bit more relaxed.
Who was the first lender that didn't offer you the loan?
As for the property and not meeting the contract terms for the vendor, I was going to suggest you get your conveyancer to put a caveat on their property if you really wanted it. That, however, may not lead to an amicable settlement

 

[JuddsABlue]

I work for one of the big 4 and was going to suggest ANZ as their lending criteria is a bit more relaxed.
Who was the first lender that didn't offer you the loan?
As for the property and not meeting the contract terms for the vendor, I was going to suggest you get your conveyancer to put a caveat on their property if you really wanted it. That, however, may not lead to an amicable settlement

Original lender was Homeside

The original settlement date was only pushed back by a week so the end result isnt bad at all, just the process wasnt as smooth as we wouldve liked

I'm a bit surprised to hear ANZ have a relaxed criterea though I always pinned them as the tough one of the big 4

 

[Power Raid]

Loan was approved which was good, 20% deposit and didnt need to provide proof of savings etc

Can I ask what your occupation is?

I think they may have been worried about a "cash business" which could lead to tax issues or worse.

It probably, is just how you wrote your posts which raised flags

 

[PickThatOut!]

e

 

[PickThatOut!]

hahah yeah it is like that

 

[PickThatOut!]

but what can you do about it?

 

[PickThatOut!]

its all about democracy

 

[PickThatOut!]

what about Rudd?

 

[PickThatOut!]

find the diff?

 

[JoondalupJ]

I guess this is more for mortgage insurance, but just looking for an overall opinion

Recently applied for a home loan with 18% deposit (377k purchase price 402k with stamp duty etc, 70k deposit)

The loan was approved but the mortgage insurance was not. We then put in a 20% deposit however the bank wasnt comfortable. Currently in the process of applying with a new bank with 20% deposit though I dont really think it'll work (just because of the knock back, doesnt feel right)

Anyway

So I was saving every week for 1 year total, but over chirstmas and jan I stopped saving because basically I was at the point of applying and had what I wanted. When I say saving, I mean moving money into a seperate account etc (the amount I was moving was a touch smaller than the weekly repayments of the mortgage, however I had current rent costs which I paid cash), I stopped doing this over Chistmas but my spending didnt increase.

I guess the major problem is my bank statement is a pretty messy thing. Lots of large cash withdrawls, resturant transactions, online punting deposits and withdrawls, 3 direct debits etc. Random cash deposits in branchs of 2k upwards etc. I also went on a holiday in November that cost around 9k

I feel that this might have given the mortgage insurer an uneasy feeling. Also the statement that they saw only covered from October to now, so they saw the holiday and Christmas period but really didnt see the solid saving from a year before that.

So basically, what do banks like to see? If the current application doesnt work then I'll take it easy for another 8-12 months and make sure my bank statement is much cleaner and re apply, but looking for some advice on the big dos and donts when it comes to a bank account

The Barefoot bloke , recommends 20% deposit. For home buying.
Thats a good saving.
It may not be your statements that are the problem.