What impact does gambling have on a mortgage application? It probably won’t surprise you that gambling and mortgages generally don’t mix well. When a bank lends you money for a mortgage loan, it means they trust you will be able to pay it back. However, if they see that you’re an active gambler, then this may go against your application. ONLINE gambling and evidence on your credit card statements of paying Paddy Power and other internet bookies is a 'red flag' that may stop you getting a mortgage, the Sunday Independent has learned.
Other items being scrutinised by banks include tuition fees, Sky digital subscriptions and mobile-phone bills.
Chief executive of mortgage debt advisory firm Negotiate, Trevor Grant, said gambling transactions on bank statements are often used as a reason to decline a mortgage or restructure application, regardless of any other financial information submitted and its strength.
Mr Grant said: “When a lender assesses an application for reduced mortgage repayments due to financial difficulty, the customer is required to submit a detailed application, often including current account and credit-card statements.
“Not unreasonably, lenders will form a view that if the customer is struggling to pay their mortgage they should be tightening their belts, and they consider gambling, for example, as a non-essential activity and therefore should be one of the first social indulgences to be cut,” he said.
The director of the Irish Mortgage Corporation, Frank Conway, said he has seen cases where lenders have questioned mobile phones, school tuition costs and Sky bills.
A spokesman from the Irish Banking Federation said it is important that borrowers seeking to restructure their mortgage repayments carefully review all of their income and expenditure as part of discussions with their lenders, in order to help identify a “new, workable repayment arrangement”.
Applying for a mortgage can be a tricky process for anybody, no matter what their age or financial situation. There are multiple factors that can affect a mortgage application, some of which you may not have considered previously.
One of the first things a lender will look at is your credit score. Again, this can be affected by various circumstances, but you may not have considered that a leisurely gambling habit could have its own consequences.
The mortgage application process
When you first apply for a mortgage, your chosen lender will assess your household income including your basic salary plus any extra income such as freelancing or benefits.
During this process, the lender will ask for documentation of your bank accounts, including copies of your statements for the past three to six months. Here, they'll be able to see your regular transactions, so it’s wise to keep an eye on your deposits if you’re a regular player.
Will online banking deposits affect my application process?
There is no clear-cut answer for whether or not a mortgage lender will refuse to lend you money based upon your gambling deposits. However, if they can see regular payments into online gambling operator accounts, these may present a cause for concern.
Why lenders have to look into your spending habits
The mortgage lending process has not always been so strict, but as most of us will recall from the credit crunch of 2007, being lenient can have its setbacks.
In 2014 and later in 2017, regulations were introduced for lenders which meant that they had to assess the affordability of a loan in much more detail. This included the aforementioned review of transactions – regular online gambling payments have been known to make lenders think twice.
Why gambling may deter lenders
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Mortgage lenders don't pass judgement on applicants – they merely need to assess the risk of lending out thousands of pounds at a time.
However, statistically speaking, “problem” gamblers have less chance of having a healthy savings account, which in turn will affect the amount to which they can put towards a deposit and ultimately influence the outcome of their application.
There is no need for doom and gloom, however, as the majority of gamblers are not problem gamblers and just like to indulge in an occasional fun habit. Keep an eye out for any of these signs if you’re thinking of applying for a mortgage any time soon:
Spending less time with family and friends, and more time gambling
Depositing more money than you can reasonably afford
‘Chasing’ bets to recover losses
Losing enjoyment in gambling
To stay on the safe side when it comes to impressing mortgage lenders, there are a few pointers that you can bear in mind.
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Improving your credit score
A credit score is a rating out of 1,000 (sometimes it can be out of 700) that determines your reliability as a person with credit. Personal wealth has no bearing on this. Instead, it is actually better to accumulate a small amount of debt, for example, a mobile phone bill, and continue paying this off in regular instalments to prove that you can maintain regular payments.
The beauty of a credit score is that it changes month by month – sometimes for better, sometimes for worse! You may find that “silly” things, such as small expenses like taking out a new mobile phone contract, affect your score by a few points.
However, your score can also increase over time. Sometimes this happens naturally as time wears on, for example, if you carry on paying off regular payments such as credit card bills.
You can also improve your credit score by paying off any old debts you might have. So, if you have an old store card that could do with knocking on the head, try taking a little out of your savings – your credit score will appreciate it.
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Stop gambling
This is, of course, the last resort for those whose gambling deposits may look unfavourable on a mortgage application. However, as mentioned above, credit scores can improve over time, so if you need to tone down the gaming for a few months, it might be a worthwhile investment in the future.
If you’re not sure how to limit yourself when it comes to gambling, you can try out several different methods including a ‘time out’ or even self-exclusion, which can freeze your accounts for up to six months.
Set up a new bank account
If you’re not ready to stop gambling altogether, then your mortgage lender only needs to assess the accounts from which you make regular payments – for example, bills and taking wages. You're within your rights to set up a new bank account or to simply use an existing one which may be inactive.
Be careful, however – you need to monitor this bank account just as much as you would your main accounts. Transactions are still being made, so you should still keep a keen eye on your spending.
What not to do
Believe that winning at online gambling will satisfy a mortgage lender
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Just because the money you’ve invested in gambling is going back into your account, does not mean that mortgage lenders will class this as a reliable source of income!
Take out a loan to pay off gambling debts
If your habits have got to the point that they need a loan to pay them off, a mortgage lender will smell this a mile off.
Keep on gambling if you have a problem
Sometimes, it might take others to convince you that a once leisurely pursuit is now too much time spent gambling. Consider a limit on your account if you identify with any of the statements listed above.
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A mortgage lender is far more likely to judge your credit score than a few harmless bets. Pay your debts and be transparent with your spending, and the rest should be easy!