Yahoo Finance Don’t transfer cash to mates with silly labels if you’re applying for a loan
It’s a classic Aussie gag: at one point or another, we’ve probably transferred cash to a friend after they picked up the bill in full with a silly or suggestive description.
It could be about illicit drugs or sexual services, but it’s definitely not just “dinner”.
And while it’s all in jest at the time, lenders are scrutinising these kinds of descriptions in the bank statements of those applying for a bank loan, Domain reported.
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“We literally go through your statements line by line,” Pink Finance’s director, Nicole Cannon, confirmed to Yahoo Finance.
“And we have to categorise it, and if the description has something suggestive in there, the banks may question it.”
And, if lenders see the same suggestive expense more than once, they might question whether that particular activity is an ongoing expense.
But lending institutions are open to your explanations too.
“You can tell them it was for dinner or an event, and we’ll put that under as an entertainment expense. We can classify it, but just know that it will be questioned.”
What else are lenders looking at?
Are you an avid Uber Eats user? Banks will be keeping an eye on that too.
Managing director of Gemmill Homes, Craig Gemmill, said prospective homebuyers need to be minimising their expenses.
“Work on minimising unnecessary spending in the months prior to applying,” he said. “Less Uber Eats could have a significant impact on your chances of approval.”
Gambling habits are also scrutinised by lenders, with White Knight Finance director Steve Vicary telling Domain it’s a major “red flag” to a lender.
Banks have gotten even more intrusive since the Royal Commission too: they want to know about your buck’s night.
If you’re stressed about the last decade of silly transfer descriptions, or a crazy before-wedding party, don’t be - according to Cannon, lenders will generally look at the last three to six months of statements, so just ensure there’s “good conduct” in those.
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