Are ATM withdrawals a red flag for banks?

Are ATM Withdrawals a Red Flag for Banks?

Mark Stevenson, Managing Director at Bell Partners Finance (now Evolve Lending & Finance) wrote for The Western Weekender to clear up a common concern that had been circulating among borrowers: whether using cash and making ATM withdrawals could hurt a home loan application, particularly in a post-COVID environment where card payments had become more dominant.

The short answer Mark gave was no, ATM withdrawals are not automatically a red flag for lenders. Banks had been scrutinising bank statements long before the pandemic, and cash usage on its own is not a cause for concern. What matters is the context behind any item that appears on a statement, whether it is income, expenses or withdrawals. As long as there is a clear and satisfactory explanation, and supporting documentation where needed, most items will not negatively affect an application.

Mark did draw a distinction though. Lenders are generally comfortable with borrowers who withdraw cash for everyday essentials, bills, or occasional larger expenses like clearing a credit card balance. Where things can become problematic is when statements show a pattern of large or frequent ATM withdrawals at hotels, bottle shops or clubs, or regular payments to gambling or betting agencies. These types of transactions signal spending habits that lenders view as higher risk, and are more likely to prompt additional questions or a negative assessment.

The broader point was about awareness. Borrowers preparing to apply for a home loan are often surprised by the level of detail lenders examine in their statements. Understanding what banks are looking for, and having a clear narrative around any unusual transactions, puts applicants in a much stronger position.

Preparing for a loan application and want to know what lenders will be looking at? Contact Evolve Lending & Finance for guidance before you apply.