Ask Sindie: Mortgage applicants lost in cyberspace

People with online bank accounts face an extra cost in providing hard proof of their income
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Q: During my recent flat purchase, I was asked to provide a selection of documents by my mortgage broker - including bank statements as proof of income.

As a Premier current account customer with Alliance & Leicester [A&L], I do most of my banking online [this account can also be run via branches or on the phone] and so simply printed the relevant statements off the internet.

However, the broker told me copies weren't evidence: only the originals would do.

Thankfully, Premier includes a hard copy of my statement sent to me monthly, and I obliged.

However, I've been planning to upgrade my current account to A&L's separate Premier Direct [which pays more interest on balances]. This is exclusively online and I'm not sure if it will be possible to meet bank demands for proof of income when I move again.

Should I worry? I don't see what's wrong with bona fide copies.

LK, by email

A: Your concern is genuine and has been sparked by lenders' decisions to defend themselves against fraud and the inflated salary claims of borrowers who are after a bigger home loan.

First, the mortgage industry must comply with anti-money laundering rules, designed to stop criminals turning stolen "dirty" cash into "clean" assets by way of a home loan. Lenders therefore carry out identification and address checks, explains David Hollingworth of broker London & Country. "Documents such as [original] bank statements can be used here."

Second, these documents can corroborate - or otherwise - the income claims made by borrowers on their application form.

"[We need] evidence that the applicant will fit the lender's criteria and be able to service the mortgage," he adds.

But the need for original documents can leave internet users stuck in cyberspace.

"A lot of people go to lenders with statements they have printed off from their online account," says Melanie Bien, associate director at broker Savills Private Finance. "But they won't be accepted as they can be easily manipulated - and open to fraud."

If you had already switched to Premier Direct, you'd be stuck: the bank sends only a monthly email of your transactions and advises you to print it off for your own records. To get their hands on an original bank document, customers are charged £5.

A&L isn't the only one: the same £5 cost applies at internet bank Cahoot. At First Direct, meanwhile, customers with a cheque account can request paper statements from the past two years free of charge. But anything further back costs £2.50 per statement. Regular bank account customers at First Direct must pay £2.50 every time.

At Smile, you can get a paper copy at a cost of £2.50 per sheet for a statement from the past 12 months - rising to £10 per sheet for anything older.

It is possible that these costs might disappear in the future as, says Mr Hollingworth, "electronic ID verification becomes more prevalent".

In the meantime, it's probably not worth avoiding a decent internet-only account for fear of running into such costs. And in any case, there are other ways to get round the problem of proving your income. For example, says Ms Bien, your lender may be happy to accept payslips instead of a bank statement.

Even when you are asked for statements on top - as might happen if you are borrowing at a high loan-to-value, say, and need to give additional proof of income - you should be OK. "The solution is usually to take the printed statements into your bank branch and ask someone there to stamp them to verify the information."

If you need help from our consumer champion, write to Sindie at The Independent on Sunday, Independent House, 191 Marsh Wall, London E14 9RS or email sindie@independent.co.uk. We cannot return documents, give personal replies or guarantee to answer letters. We accept no legal responsibility for advice given.

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