According to new research from mortgage broker Boon Brokers, 83 per cent of people say they aren’t aware activity on their bank statements could be a red flag to a mortgage lender. Even when prompted, 58 per cent had never considered that gambling transactions on their account may cause any issues.

When given a list of transactions which might give lenders a reason to take a closer look, 55 per cent didn’t feel that payday loans would be a cause for concern, and 58 per cent didn’t feel that being constantly in an overdraft would be a red flag.

Three in four (72 per cent) didn’t believe that having multiple payments coming in with no clear reference of what they were for would ring alarm bells, according to Boon Brokers which surveyed more than 2,800 people in the UK.

Gerard Boon, partner at Boon Brokers, said: “Not all lenders will scrutinize your bank statements, but if you’re seen as a higher risk, perhaps with a smaller deposit or from being self-employed, lenders are more likely to take a closer look. Anything which shows that the account holder may struggle with debt or to control their spending is likely to create questions.

“Our research revealed that the equivalent of 1.38 million current homeowners** (four per cent) would consider trying to hide transactions on their bank statement to make sure their mortgage got approved – which we definitely would not recommend! If you’re planning on applying for a mortgage or remortgage in the next six months, it’s worth being aware of what may lead to further investigations – even though in many cases it’s totally harmless and easy to explain. You don’t want any unnecessary delays to your application which could stop you getting the property you want. As our research revealed, not all the things that could cause an issue are automatically that obvious – gambling, pay day loans and being in an overdraft are the ones people are more aware of, but there are others too.”

Boon Brokers’ research revealed the transactions people were least likely to know may be a red flag to a mortgage lender and impact on lending eligibility were:

1.       Working for a family business. Just three per cent of people realised this could be an issue. Lenders can be nervous that family have employed the relation just for the purpose of them being able to take out a mortgage.

2.       Using rude/joke references for payments to family and friends. Only one in 10 (nine per cent) said they thought it could cause any hold up with a mortgage application – but using ‘funny’ references which could be misconstrued may mean a lender needs to investigate further.

3.       Having multiple payments for luxury items. Only nine per cent thought this could be of potential concern. Lenders will worry if they feel that spending is out of control and exceeds what they would expect based on the applicant’s income

4.       Having lots of PayPal transactions. Although PayPal transactions in themselves are not a problem, because it’s not always clear who is being paid, having lots of vague PayPal transactions can raise concerns. Only a tenth of people had considered that (nine per cent).

5.       Catalogue or on credit payments. Buy now, pay later options may signal to a lender that you are unable to pay for day-to-day items upfront, or are buying things beyond your means – something which only 13 per cent of people realised.

6.       Playing bingo. Playing once in a while for fun with friends will cause no concerns, but a regular habit with larger sums would be classed as gambling, which may raise a red flag. Only one in eight had registered that as a potential concern (13 per cent).

7.       Multiple store cards. Store cards in themselves are not an issue, but if you’re struggling to clear the balance every month, given their notoriously high interest rate, it could be a warning sign to the lender, which 18 per cent of people hadn’t considered.

8.       Frequent payments to unknown third parties. There are lots of above board reasons to make frequent payments to third parties – but where possible, it’s best to make the reason clear to minimise any risk of a red flag. Eighteen per cent of people hadn’t considered that as an issue.

9.       Large cash deposits/cash-in-hand work. Surprisingly, only 20 per cent of people thought this would be of any interest to a mortgage lender – who will want to see evidence of steady, reliable and legitimate income.

10.   Taking out a recent credit card. Only one in five people (22 per cent) realised that applying for new credit can knock your credit score, which is something all lenders will look at to assess your eligibility.