Broker urges clients not to use 'banter' on bank transfer references, and lenders agree
Many people may have written something humorous or tongue-in-cheek on a bank transfer between friends or family – but it may not prove to be the harmless good fun that it seems at the time. A senior mortgage adviser is warning that it could affect an applicant’s chance of borrowing – and lenders have backed his call for prospective borrowers to be cautious.
Mark Attridge (pictured left), from JMK Wealth Management highlights the potential risk of seemingly off-the-cuff comments appearing on bank statements. One of Attridge’s current clients, a young first-time buyer, is seeking to borrow 95% and has engaged in what the broker describes as banter. “Whilst sexual innuendos can be perceived as funny or banter, they certainly do nothing to help a credit case,” Attridge commented, adding that it makes a mortgage applicant lack credibility as a responsible borrower, and is only going to create further questions and scrutiny from an underwriter. “For anyone who is planning to apply for a mortgage in the next three months, then if transferring monies to friends and family, please refrain from the subtle sexual innuendos or inappropriate language within the bank transfer narrative,” he said. “Let’s think and give ourselves every chance of mortgage success and getting things right first time.”
Attridge makes clear that he isn’t suffering a sense of humour failure. “I am not so old that I have forgotten what banter is,” he said. “Any client that I engage with will receive the same advice that my best mate or any family member would receive. If I see my family or friends do it then I will pull them up, so I certainly will do the same for a paying client.”
Senior mortgage and protection adviser Robert Ferguson, from Property Finance Hub, reports that he has seen humorous comments on bank documentation which have impacted an application. “I've had an underwriter decline a case for a bank transfer labelled ‘drugs’,” he shared. “I've also had a case sail though where there were bank transfers full of sexual innuendo. I think it depends on the lender.”
Broker Neil Renwick (pictured second from left), at CARA Mortgage Services, agrees. “I think you are giving the lender an excuse to walk away from the client if you are using references that point to any kind of illegal activity,” Renwick told Mortgage Introducer. “Lenders won’t take a chance if there is even the slightest chance of something nefarious going on. My advice would be to not cause yourself any unnecessary issues. I do see the odd reference that raises an eyebrow, but to date it’s not caused me any issues.”
Broker Luke Senior (pictured second from right) is sceptical though that a funny comment on a bank transfer would materially change the outcome of an application. “I’ve not had a client rejected for a mortgage based on payment references on bank statements,” Senior said. “I can’t help but think it is a bit of an old wives’ tale, if I’m honest. I very much doubt people pay for cocaine - or whatever else - via bank transfer!” Senior notes that it is rare to see funny comments on bank transfers, and it is usually between couples rather than friends. “I see it a couple of times a year, if that,” he commented, adding though that he’s cautious in his bank transfers. “I just have ‘money’ as a reference for anyone. I’d not want to be the first person visited by the police for a bank transaction reference - knowing my luck it would happen to me!”
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What do lenders say?
Peter Dockar (pictured right), chief commercial officer at lender Gen H, suggests that for 95% of borrowers a questionable comment won’t make any difference to their applications. Underwriters are looking for character as shown by their a credit score, affordability and collateral, in terms of a sufficient deposit. “For most borrowers there’ll be a track record of successful credit and the underwriter will simply be scanning the statement for undeclared payments or poor account conduct, or significant levels of gambling transactions etcetera,” Dockar said. “But if they’re dealing with a case that is tight on affordability and a limited credit history, then the only character reference they can get on the customer’s attitude to managing finance will be the bank statement. In those edge cases, banter could form part of a negative fact pattern, for example alongside returned direct debits, and frequent overdraft use that could tip a marginal case from accept to decline.” He added: “So it would never be the deciding factor, but a bit like a typo on a CV, it’s not going to help turn a no into a yes.”
Darren Deacon (above inset, left), head of intermediary sales at Family Building Society, also urges mortgage applicants to be cautious in what they write in the course of their financial transactions. “I have heard underwriters talking about inappropriate wording on a bank statement but it wouldn’t wholly jeopardise the application even if it was of a sexual nature, within reason,” Deacon said. “However, for something more sinister it will open up the underwriters’ antenna and possibly get them to look more deeply into the application. I think it is best practice for anyone to be mindful of what goes into the narrative on a bank statement, if they are to be seen by a third party.”
Sam Hutchins (above inset, centre), property finance adviser at Blueberry Specialist Lending, is clear in his views on adding humorous notes to transactions. “My advice would be to always avoid it where possible, however I have personally never seen any cases declined or any negative impact,” Hutchins said.
Meanwhile, broker Michelle Lawson (above inset, right) is more concerned about the accuracy of bank statements. “I’d rather see more accurate stuff as sometimes things like maintenance aren’t clearly indicated, so people just need to make sure that important transactions are clear,” Lawson said.
