Disclaimer:
The information on this website is for general guidance only and does not constitute financial or investment advice. Always do your own research and seek personalised advice from a qualified financial adviser or mortgage adviser before making financial decisions. All investments carry risk and past performance is not indicative of future results.
Key Takeaways
- Clean, consistent bank statements can support a pre-approval application, but approval still depends on the full lender assessment.
- Avoid unarranged overdrafts and dishonoured payments.
- If you need a buffer, discuss options with your bank or adviser rather than relying on unarranged overdrafts.
- Plan automatic payments around payday.
- Maintain good conduct for at least three months.
What is Good Bank Account Conduct?
One of our Tips For Getting A Yes To Pre-Approval is to show consistently good bank account conduct. Keeping your bank account in good order is often not considered by first home buyers when preparing to get a pre-approval.
First home buyers often wonder 'Why does this matter to me?' or 'What does this mean when getting pre-approval?' Well, the answer is that Lenders need to make responsible-lending enquiries and assess whether repayments are affordable, using bank statements and other information depending on the application.
Important: As a part of your home loan application, a lender will request your past 3 months of bank statements. If your statements show you regularly overdraw your account, this suggests to the bank that you may not be living within your means or that you are not managing your finances well. These signs can raise questions for a lender and may affect the assessment, especially if they appear repeatedly or are not explained.
What To Watch Out For
- Your bank account slipping into overdraft
- Dishonoured automatic payments
Understand The Difference Between Arranged And Unarranged Overdraft
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One key thing for first home buyers to understand when it comes to good bank conduct is the difference between an arranged overdraft and an unarranged overdraft. If you think that your bank allows you to go over your limit and that it is totally fine you could be wrong.
Warning: Allowing your account to go overdrawn without having an arranged overdraft facility with your bank can create fees and may raise concerns when a lender reviews your bank conduct. An arranged facility may be less concerning than repeated unarranged overdrafts, but it is still a credit facility and can be considered in affordability.
How To Remedy A Bad Banking Track Record
If you do find your bank account conduct is less than perfect, there are steps that may help improve how your bank conduct presents to a lender:
- Plan Your Automatic Payments: Lining up your automatic payments to go out as soon as possible after payday will ensure your priority payments go out before any discretionary spending.
- Maintain A Float: Try to make sure that you have a buffer amount in your account to ensure you do not go overdrawn at all.
- Discuss Buffer Options: If you need a buffer, discuss options with your bank or adviser rather than relying on unarranged overdrafts.
- Keep a Good Record: Many lenders review recent statements, often around 3 months, so consistent conduct over time can help show reliability.
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Have a question about this?
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