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    • kazzyb123
    • By kazzyb123 12th Feb 18, 11:07 PM
    • 59Posts
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    kazzyb123
    Mortgage and tax credits
    • #1
    • 12th Feb 18, 11:07 PM
    Mortgage and tax credits 12th Feb 18 at 11:07 PM
    Hi,

    We will be applying for a mortgage soon and I was hoping to use tax credits as included income. However, there has been an overpayment so the payments have stopped for now.

    Will the building society look at the award amount and not care about the overpayment (it will be paid back next year and won’t be there every year).

    Also, if we apply between April and July we won’t know the award for 2018/19 because of being self employed and the renewal isn’t processed until July so I have no way of knowing what it will be. In this case will they base it on the previous year?

    Has anyone else been in this situation please?

    Thanks.
Page 1
    • amnblog
    • By amnblog 13th Feb 18, 7:51 AM
    • 10,286 Posts
    • 4,064 Thanks
    amnblog
    • #2
    • 13th Feb 18, 7:51 AM
    • #2
    • 13th Feb 18, 7:51 AM
    Lenders are only interested in tax credits where they have an up to date award letter that reflects your current income.

    An overpayment normally means incomes have risen and tax credits fallen.

    A Lender will not assess the case based on the new higher income and the old higher tax credit award.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • kazzyb123
    • By kazzyb123 13th Feb 18, 12:44 PM
    • 59 Posts
    • 7 Thanks
    kazzyb123
    • #3
    • 13th Feb 18, 12:44 PM
    • #3
    • 13th Feb 18, 12:44 PM
    Thanks for the reply, I understand that, the problem is I won’t have an up to date award letter until July and I will probably be applying between April and July. I won’t be able to use the previous years letter but I won’t have the current years letter yeah either!
    • crystalpinks
    • By crystalpinks 13th Feb 18, 8:52 PM
    • 18 Posts
    • 6 Thanks
    crystalpinks
    • #4
    • 13th Feb 18, 8:52 PM
    • #4
    • 13th Feb 18, 8:52 PM
    We came across a similar issue when applying for our mortgage last month. Our income had increased (halfway through tax year) and tax credits dropped meaning an overpayment, but as we know tax credits is based on previous years income! We couldn't update our income on tax credits to match the income we'd declared on the mortgage app- as you can't do that until July for the following years award! Nightmare!
    I didn't use a broker so had to explain this to Halifax - (who initially insisted it had to be correct income within 2.5k (not possible)
    It then went to underwriters with this information and they approved it- they based it on the 'provision payments from April 18' bit.

    It was a massive headache but we got there, are you using a broker?
    • pollyanna24
    • By pollyanna24 13th Feb 18, 11:15 PM
    • 3,740 Posts
    • 4,547 Thanks
    pollyanna24
    • #5
    • 13th Feb 18, 11:15 PM
    • #5
    • 13th Feb 18, 11:15 PM
    I wanted to use tax credits as income when I bought my brrother out two years ago and nationwide said they would take it into account.

    But they would never accept any letter that I requested from tax credits as it always said “estimated” on it as that was their policy if I asked for a replacement letter.

    However, if I had the original “estimate” letter of what I should be getting, this may not have mattered. I don’t even know if the original letter said “estimated” or not, but it probably did as I suppose anything can change in the course of a year.

    And maybe nationwide were just being difficult. But in the end, I had to ask them to take this income off the application and had to rely on my salary.
    Pink Sproglettes born 2008 and 2010
    House Worth (approx) - £400,000
    Mortgages (3rd Nov 2017) - £180,813.85
    Equity - £219,186.15
    • kazzyb123
    • By kazzyb123 13th Feb 18, 11:45 PM
    • 59 Posts
    • 7 Thanks
    kazzyb123
    • #6
    • 13th Feb 18, 11:45 PM
    • #6
    • 13th Feb 18, 11:45 PM
    We came across a similar issue when applying for our mortgage last month. Our income had increased (halfway through tax year) and tax credits dropped meaning an overpayment, but as we know tax credits is based on previous years income! We couldn't update our income on tax credits to match the income we'd declared on the mortgage app- as you can't do that until July for the following years award! Nightmare!
    I didn't use a broker so had to explain this to Halifax - (who initially insisted it had to be correct income within 2.5k (not possible)
    It then went to underwriters with this information and they approved it- they based it on the 'provision payments from April 18' bit.

    It was a massive headache but we got there, are you using a broker?
    Originally posted by crystalpinks
    Thanks, that’s exactly the problem. We aren’t using a broker unless I find one that has any better offers but no look so far.
    I have updated the income amount to match the mortgage amount and received a letter saying that but obviously it runs out in April!
    I’ll try to call them tomorrow and ask but tax credits are always based on estimates if you self employed. As long as I’m not estimating more than my partner earned in this tax year I’m hoping it won’t be a problem. To prove this years income I have to wait until the books year end accounts have been calculated so looking to buy April, May, June time.
    The award isn’t much but it makes a 7K difference to what they will lend us.
    • kazzyb123
    • By kazzyb123 13th Feb 18, 11:47 PM
    • 59 Posts
    • 7 Thanks
    kazzyb123
    • #7
    • 13th Feb 18, 11:47 PM
    • #7
    • 13th Feb 18, 11:47 PM
    I wanted to use tax credits as income when I bought my brrother out two years ago and nationwide said they would take it into account.

    But they would never accept any letter that I requested from tax credits as it always said !!!8220;estimated!!!8221; on it as that was their policy if I asked for a replacement letter.

    However, if I had the original !!!8220;estimate!!!8221; letter of what I should be getting, this may not have mattered. I don!!!8217;t even know if the original letter said !!!8220;estimated!!!8221; or not, but it probably did as I suppose anything can change in the course of a year.

    And maybe nationwide were just being difficult. But in the end, I had to ask them to take this income off the application and had to rely on my salary.
    Originally posted by pollyanna24
    Oh, dear, that doesn!!!8217;t sound good! Like you say tax credits are based on estimated income if self employed so it!!!8217;s going to be tricky, I really don!!!8217;t want to wait until the renewal in July because the house we are currently renting is up for sale. I!!!8217;m sure all of the letters say estimated.

    Thanks for the info though.
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