Can i get a sole mortgage even though i'm married?

[Deleted User]

I can't see how tax credits would be taken into account, surely?

benjo

Deleted_User wrote: »

I can't see how tax credits would be taken into account, surely?

Yes tax credits are taken into account by 'some' lenders - not all.

Some lenders will use 100% of the value of tax credits in their income multiples...

Some lenders will use a % say 50% of the value of tax credits in their income multiples.

There are other benefits too that 'some' lenders will consider at 100% or lower, like DLA, child benefit.

"I am assuming that the tax credits are because the OP has children ? So how could these temporary and for a specific purpose payments (which will probably be slashed by the Tories anyway) possibly be taken into account for a mortgage payable over at least 25 years ?"

Im gonna take a guess at the above postulation...

Assuming (for example only) I have a one year old child, will get tax credits for the next 15 years and use those tax credits, in part, to buy a house. If I am sensible, over a period of 15 years I will have paid off a fair amount of capital and so when the tax credits end I will be borrowing a smaller amount and thus need less income to meet the income multiples.

I would also hope that my wages had increased over that period of time, I would also hope that I could work more hours when my child was 16 than when it was 1.

Tax credits cease when the child reaches a certain age which coincides with finishing school/collage and in theory they either begin to earn their own pocket money and contribute to the household or go to university and cost you a further small fortune - well thats the theory, whether it is morally right is a matter of personal opinion.

What I would be more concerned about is not whether it is morally right but whether it is fiscally prudent to rely on tax credits for something as important as your own home.

Given the scale of 'overpayments' made by the tax credit offices and their zeal in recovering 100% of overpayments (usually over a 12 month period) I would look on tax credits as no more than an interest free loan, which will 'probably' require some level of repayment, at some unspecified time at the tax credit office's want, over a 12 month period - now if that coincides with interest rate rises or other financial hardships then it might be easier to herd cats than it is to meet your mortgage payments.

To the OP, if you are going to rely on tax credits to finance your home, please, for the love of fluffy bunnies, get the award checked by the CAB or some other welfare rights organisation before you sign on the dotted line.

[Deleted User]

benjo wrote: »

Assuming (for example only) I have a one year old child, will get tax credits for the next 15 years and use those tax credits, in part, to buy a house. If I am sensible, over a period of 15 years I will have paid off a fair amount of capital and so when the tax credits end I will be borrowing a smaller amount and thus need less income to meet the income multiples.

I would also hope that my wages had increased over that period of time, I would also hope that I could work more hours when my child was 16 than when it was 1.

Assuming the above to be valid, how likely is it that lenders are savvy enough to request details of how old dependents are? In other words, I can see the sense in your argument, but if you have a 15 year old child (not sure how old these tax credits go up until, but let's say they have 1 year left of entitlement), I'm making the assumption that the lender's systems aren't savvy enough to distinguish between this and a 1 year old child, in which case your argument - although valid - doesn't stack up.

Does that make sense?

If a lender takes child tax credits into account, then unless it asks you to specify how old your child is, they can't tell whether this source of income is going to dry up in 15 years or 15 days.

[Deleted User]

Oh, and replying to the original poster's question: this is an issue that I have also raised myself in another thread!

I'd be interested to know the answer, because I don't think it's as clear as people make out.

If a mortgage lender loans you money towards the value of your property, they obtain a charge against that property in case you default.

However, the law of equity provides anyone living there with a beneficial interest in the property that prevents them from being readily evicted should the title-owner default and the lender wish to execute that charge.

SO, if you are married and living with your husband, for example, but apply for a sole mortgage against the house, there is an argument - and it will take someone else on these forums to provide a definitive answer - that technically you are deceiving the lender. Or, in other words, a lender is obliged to conduct checks and ensure that they have a charge against the property in case you default. If you apply for a sole mortgage, it implies you are the one owning and living in the property, but if the real situation is that TWO people are living in the property, then the lender is in a weaker position because the security you're providing to them is 'less secure', i.e. they can't just foreclose the property because the third-party living there (the husband) who is not a party to the title deeds or mortgage, has an equitable interest that prevents immediate eviction.

So, in summary, I would check, because some lenders might only accept you on a joint mortgage if a husband and wife want to obtain and live in a house together. That gives them a bit more protection than a sole mortgage in which a third-party can't be evicted.

Does that make sense? I think someone with better legal knowledge than I should be able to answer this or confirm if I'm correct/incorrect!

herbiesjp

Deleted_User wrote: »

Assuming the above to be valid, how likely is it that lenders are savvy enough to request details of how old dependents are? .

Simple - they ask for a copy of the award letter

It has the names and DOB of the children

Then it is down to the lender to decide

[Deleted User]

herbiesjp wrote: »

Simple - they ask for a copy of the award letter

It has the names and DOB of the children

Then it is down to the lender to decide

But my point is (and I'm not disagreeing with you - I'm just curious as to the answer) - do they actually factor this into the calculation of the offer, or is this just a binary 'yes/no' check box that gets ticked? e.g. if I receive £1k tax credits every year and I have a salary of £30k, do they just consider me to earn £31k income ad infinitum (with scope for growth) or do they actually form a calculation based on £31 for X years, then £30k remainder?

herbiesjp

Yes - an underwriter does look how long an award is for.

So if it in only for one year etc, they will not take them into account

They have to be shown to lending responsibly

[Deleted User]

Very interesting!

herbiesjp

But they look at the overall picture.

So that will be one element, along with all the other details in the scenario.

They need to understand a case and its merits, so even if the award may not run for a long time, but there were other circumstances which would help the application, it may still go through

It is not a clear cut yes or no answer.

benjo

Deleted_User wrote: »

Assuming the above to be valid, how likely is it that lenders are savvy enough to request details of how old dependents are? In other words, I can see the sense in your argument, but if you have a 15 year old child (not sure how old these tax credits go up until, but let's say they have 1 year left of entitlement), I'm making the assumption that the lender's systems aren't savvy enough to distinguish between this and a 1 year old child, in which case your argument - although valid - doesn't stack up.

Does that make sense?

If a lender takes child tax credits into account, then unless it asks you to specify how old your child is, they can't tell whether this source of income is going to dry up in 15 years or 15 days.

Yep, makes complete sense, but you would have to provide the award letter as proof of income, which shows the DOB of the child - as herbiesjp said.

I think you are also asked about dependants during the application process and their DOB, so I think it would be pretty clear if you have only a short time left to run on the award.

If there was only a year left to run on the award after that time the dependant would no longer be dependant, since they should be earning their own pocket money, costing the mortgage payer less and contributing their bit to the household income - weeeelllll thats the theory, Im sure in practice children continue to cost parents a small fortune well beyond their school/study years.