Sometimes certain circumstances will prohibit you from obtaining a mortgage. However, there are some misconceptions over certain situations where it may seem impossible, when in fact it is entirely possible. Here we debunk some mortgage myths…
1. NEW JOB
I have met with plenty of clients that have not started looking for properties and subsequently lost out as they were under the understanding that they needed to be in a current position to apply. Although the majority of lenders will need at least one month’s payslip, we have lenders that will accept an application based on the fact you are starting a new job. The new start date has to be within 3 months at the point of application and a fully signed contract of employment and letter from HR management confirming said start date and salary would be required.
2. IN PROBATION IN CURRENT JOB
This ties in with above and again, many clients have not looked for properties until they are out of probation. Again, we have lenders that are happy to lend even if a job has only just started and you’re in probation.
3. ONE SET OF TRADING ACCOUNTS
In terms of questions about self-employment, this comes up a lot and is a very common occurrence. As long as you have been trading for at least one full year and have either company accounts or tax return figures, then we have lenders who are willing to lend based on this sole year. This will limit the lenders you can go to, so it would be prudent to have 2-years accounts and tax return figures. However, for those looking that do not have the sufficient 2-years…we have the lenders.
4. BUILDERS ON CIS PAYMENTS
The Construction Industry Scheme (CIS) is a tax deduction scheme which involves tax being deducted at source from payments which relate to construction work. CIS does not apply to payments made to employees, since payments to employees are covered by the Pay As You Earn (PAYE) system of deduction of tax at source. We have many lenders that will take an average over a certain period. If you are on CIS payments be sure to speak to an adviser as many high-street lenders have strict rules on how they calculate your income.
5. MATERNITY PERIODS
We have seen many clients in this position. It seems that having a newborn falls in line with needing to upsize or move. However, many clients are fearful that due to their maternity pay they will be unable to find a lender. As long as you can demonstrate suitable proof via a letter from your HR department that confirms your return to work date and return to work income, then we have lenders that will take this income as your current and not your maternity or statutory maternity pay (SMP). We would always advise and assess your affordability during the period of maternity to make sure you could afford the payments on a lower wage.
HOW THE RIGHT POLICY PAYS
Problem: Mr. & Mrs. A are relocating and have had their cover in place since 2008 which was due to finish in 6 years, in line with their existing mortgage.
- Their new mortgage borrowing will be over in 13 years.
- When they had arranged their cover in 2008 they were smokers.
- New life policy to match their mortgage borrowing over the next 13 years is now cheaper than they were paying, as they are now non-smokers.
Solution: Mr. A is self-employed and had looked at Income Protection several years back but found it to be too expensive. Due to the recent changes in the provider’s products and definitions, there were a number of products available that enabled our client to cover his outgoings each month with an income protection policy.
The total cost for the new life cover and the income protection came out less than he was previously paying for just his life cover. This just goes to show the importance of reviewing your insurances every 4 to 5 years as your circumstances may have changed, meaning you can either make a saving on what you are paying, or increase the level of cover you have.
Affinity Protect can offer a full review of any existing arrangements you have. We charge no fees for our Insurance advice and we can research the whole market to ensure you are looking at the best cover for your situation.
DID YOU KNOW?
- Almost 5 million renters in the UK have no plans in place to cover their rent if they become too ill to work.
- The current Statutory Sick Pay benefit is £88.45 a week – could your family survive on this?
- 40% of businesses would cease trading in under a year after the death/illness of a key person.
- 1 in 2 people in the UK will get cancer.
Our friends at Affinity Mortgages offer clear, concise advice and offer helpful guidance on any mortgage-related question you may have. Get in touch on 01702 337 003 or email firstname.lastname@example.org.