I've updated the address for the BRP online but I didn't select the option of notifying them of a dependent change. Is that okay or will I need to let them know we've had a 3rd child?
No, because UK citizen children are not visa dependents (they do not need a visa to live here), and they have no bearing on your wife's immigration status nor the financial requirement for the visa.
You just list each child on the application form when you apply for ILR, and you also provide the following for each child:
- their birth certificate
- their passport (if they have one)
- a letter dated in the last 3 months confirming their address, for example, from their GP/hospital or school
Documentation-wise - do I just highlight the monthly payments on the bank statement or ask the lender to send me a monthly statement?
Neither.
You should never highlight or black out anything on the bank statements (or any other document), as that could be considered tampering with an official document.
For the financial requirement, you provide:
- all required bank statements, in full and untouched
Plus all the other required documents for the financial category you are using.
For the accommodation requirement, you provide:
- latest annual mortgage statement, showing your monthly payment amounts
- latest annual council tax bill, showing your monthly payment amounts
They will not check your bank statements for these payments, they just need to know how much your monthly living costs are (mortgage plus council tax).