Can I apply for mortgage now that I have a 40% reduced salary?

amhscott

A week ago we started a 3 day week in line with a 40% salary reduction and I am wondering whether I am legally entitled to apply for a mortgage before my new pay slip arrives at the reduced salary.

I am aware that there is a risk that I may be made redundant and be in a worst position, but figure I have 6 months that the application will be valid for to decide whether to go for the risk and just need to know if I am legally obliged to disclose my new position to the bank. I have the added complication that the mortgage deal I am interested in is with my bank so they can see what funds arrive in my account.

It may also be that the application takes more than a month and so they are likely to ask me for my new reduced recent salary payslip, but if I was to come to an arrangement with my employers that they pay the full salary (via funds that I supply them with) would there be any implications that I should be aware of? I am quietly confident that within the 6 month period that the mortgage application is valid for that I things will be back to normal.

Hope someone can give me some sound advice.

Thanks in advance.

A

sammyjammy

I think if you were caught you could be in big trouble, its called witholding information, its a risk you'll need to consider.

RufusA

Legally it depends on what you sign. However most mortgage applications will have a declaration such as:

The information given by You to Us is true, accurate, complete and up to date to the best of Your knowledge and belief. You confirm and acknowledge that Our decision to lend is based on this information. If it subsequently transpires that any information given by You is incorrect or misleading, You acknowledge that We may demand repayment of any loan made.

If they discover you didn't give then up to date information to the best of your knowledge and belief when describing your salary, then it won't be pretty when they ask for immediate repayment of the loan secured on your home!

Personally if faced with reduced income, possible redundancy and a market with falling house prices and probable long term increases in interest rates. I wouldn't be wanting to take on a new large financial commitment / risk.

YMMV - Rufus.

opinions4u

amhscott wrote: »

A week ago we started a 3 day week in line with a 40% salary reduction and I am wondering whether I am legally entitled to apply for a mortgage before my new pay slip arrives at the reduced salary.

You can apply. But you should disclose the current situation.

I am aware that there is a risk that I may be made redundant and be in a worst position, but figure I have 6 months that the application will be valid for to decide whether to go for the risk

Or you have an unlimited time to wait and see how things pan out before applying.

just need to know if I am legally obliged to disclose my new position to the bank.

Mortgage fraud is a criminal offence and can lead to a prison sentence. Lying about your income is mortgage fraud.

I have the added complication that the mortgage deal I am interested in is with my bank so they can see what funds arrive in my account.

Don't lie then.

It may also be that the application takes more than a month and so they are likely to ask me for my new reduced recent salary payslip, but if I was to come to an arrangement with my employers that they pay the full salary (via funds that I supply them with) would there be any implications that I should be aware of? I am quietly confident that within the 6 month period that the mortgage application is valid for that I things will be back to normal.

You mean you want to misrepresent the truth? And involve others in a criminal act?

Hope someone can give me some sound advice.

Don't be a crook. Don't borrow money you can't afford to repay. Don't borrow money when you employment situation is unbelievably insecure.

amhscott

Thank you both for your honest advice. I am certainly not planning on taking any unecessary legal risk, which is why independant advice is so important. The risk for repayment of the mortage once begun is some I am more confident with despite on the paper looking otherwise.

It has been suggested that if I apply for a buy-to-let mortgage and declare my new salary that I may be able to take out a substantial enough mortgage despite having a reduced income and effectively rent it to myself. Is this true and again is there any legal problems attached?

A

opinions4u

amhscott wrote: »

It has been suggested that if I apply for a buy-to-let mortgage and declare my new salary that I may be able to take out a substantial enough mortgage despite having a reduced income and effectively rent it to myself. Is this true and again is there any legal problems attached?

A

That would also involve lying at application stage.

You can call it fraud, obtaining monies by deception, fibbing or whatever.

It ain't legal though.

amhscott

opinions4u wrote: »

That would also involve lying at application stage.

You can call it fraud, obtaining monies by deception, fibbing or whatever.

It ain't legal though.

Thanks again for the reply, but I'm not really interested in 'opions' per se, more interested in seeing where I stand. After all we all know that it is possible to work a system that is put in place and still stay in line with the law. Please do not take this the wrong way, but are you qualified in the advice you are giving or is it merely your opinion?

A

getmore4less

What is the benifit of doing this?

You have less money so probably can't afford a bigger loan anyway.

Sound like a stupid idea

dunstonh

but I'm not really interested in 'opions'

Thats his board name. What was posted was fact. The crime you are committing would depend on the severity and the intention as there are multiple laws that could be broken. It would depend on the wording of the question asked and how you answered. Prosecution itself is unlikely though providing the lender gets its money back. Repossession and you having to declare on all future loan,mortgage and other credit applications what you did is the most likely outcome (meaning many lenders wouldnt touch you again in future). That said, if its found in the coming years that consumer fraud was widespread they may start making examples and take a harder line.

We are entering new times and how lenders, regulators and the authorities decide to deal with fraudulent applications is a bit of an unknown and always will be. A good number will get away with it as they take the risk and the risk never materialises and the lender never finds out.

After all we all know that it is possible to work a system that is put in place and still stay in line with the law.

Thats the view for too many mortgage advisers took in the last 5 years and its now come back to bite with fines and prosecutions now starting to be reported in the press.

Rufus has more or less hit the nail on the head in my opinion.

FraudBuster

The Fraud Act 2006

(3) A person who is guilty of fraud is liable—
(a) on summary conviction, to imprisonment for a term not exceeding 12 months or to a fine not exceeding the statutory maximum (or to both);
(b) on conviction on indictment, to imprisonment for a term not exceeding 10 years or to a fine (or to both).

http://www.legislation.gov.uk/acts/acts2006/ukpga_20060035_en_1

opinions4u

amhscott wrote: »

Thanks again for the reply, but I'm not really interested in 'opions' per se, more interested in seeing where I stand.

That's why I told you where your suggested actions stand.

After all we all know that it is possible to work a system that is put in place and still stay in line with the law.

What you suggested is illegal. Sorry.

Please do not take this the wrong way, but are you qualified in the advice you are giving or is it merely your opinion?

I hold a CeMAP qualification, although due to a change in career have not maintained the "hands on" experience that I have.