Gifted funds, irregular income and unusual bank transactions are among the most common reasons for delays with mortgage applications, research has revealed.
David Wilson Homes, in collaboration with Terry Higgins, group managing director at The New Homes Group, has revealed some of the most common mistakes that mortgage applicants make in securing a new home.
Gifted deposits reached a record high in 2024, with reports indicating that financial gifts will contributed to 42% of purchases by first-time buyers under 55.
However, more than two-thirds (69%) of Brits were unaware that gifted funds could affect the outcome of their mortgage application.
Higgins said: “While gifted deposits can be a great way to support first-time buyers, they can also raise potential red flags during the mortgage application process if not properly documented.
“Lenders need to ensure that the funds are legitimate and not loans in disguise, which could affect affordability calculations.
“Without clear evidence of the source and nature of the gift, applications can face delays, additional scrutiny, or even rejection.
“It’s crucial to work closely with your lender and provide the necessary paperwork to avoid these issues.”
The second most common mistake mortgage applicants make was not keeping track of their bank transactions or failure to address any that might appear unusual.
Higgins noted that unusual bank transactions can make lenders hesitant to lend, as they rely on clear and stable finances.
He said: “Large unexplained deposits, frequent account transfers, or payments to unfamiliar recipients might raise questions.
“Lenders may ask for more details, which could delay or complicate your application.
“To avoid issues, keep your transactions straightforward and be ready to explain anything unusual.”
In addition, self-employed or freelancing individuals are more likely to have irregular income, which can also lead to application delays.
Higgins said it is essential to document this income accurately in order to support a successful mortgage application.
He continued: “Irregular income can make it harder for lenders to assess your affordability.
“Things like freelance payments, cash deposits or ad-hoc bonuses might seem unreliable without proper documentation.
“To avoid issues, provide clear records like invoices or tax returns to show your income is consistent over time.”
Lastly, incorrect or incomplete documentation can delay mortgage applications, as lenders may require additional information to verify the customer’s financial situation.
Higgins concluded: “Lenders rely on accurate and complete paperwork to assess your financial situation.
“Missing documents or errors could lead to a rejection or extended processing times.
“To avoid this, double-check all forms for accuracy, ensure all required documents are submitted, and communicate promptly with your lender if anything is unclear.”
