Why won't lenders consider me for a mortgage as i dont pay income tax

mattjberry

I am looking for a mortgage and I am finding that because I don't pay income tax due to the nature of my work (offshore), many lenders/underwriters will not consider me for a mortgage.

What is the reason for this?

herbiesjp

Most lenders will want earned income in the UK

There are a handful of lenders that will look at the application (do conversion into sterling) and assess on that basis.

But it will also depend on your other criteria - along with purchase price vs deposit

Specialist whole of market advice needed here

mattjberry

I get paid in sterling and have never had this problem before with previous / current mortgage.

herbiesjp

The credit crunch has led to may changes as you are finding out.

Conversion not needed - just proof of income, and fitting all other criteria

mattjberry

Any advice on lenders that will consider my application. Current mortgage with HSBC.

herbiesjp

Have HSBC said no then?

Their offshore arm should be able to help

Difficult to say as you have not given any information on the purchase/mortgage needed

mattjberry

Looking at property in the uk. It will be a joint application with the wife.

Property we want is £499,995 and we have a deposit of £100,000

so looking to borrow £400,000

I earn £46,000 but do not pay tax on it. I clear every month £3700

wife earns £22,000 a year

herbiesjp

You would be looking at close to 6 times joint salary

That is why lenders are turning you down

That is not realistic and is not going to happen I'm afraid

4 times income you might find - 6 times income you will not

mattjberry

I clear £3700 every month in my bank. For someone to earn that much in paying tax i would have to earn £66,000 a year.

so when lenders are looking at my salary it isnt a true reflection of the real situation. I can afford a lot more

TEDDYRUKSPIN

Not knowing your age, I would guess you will only be able to borrow roughly £285,600 mortgage (if you don't have any debt). £400k is way off. Even I would turn you down. I would blow a raspberry and tell you that the computer said no.............

CloudCuckooLand

'What you clear' is why they don't like non-UK incomes.

They don't know whether you might have to pay some tax in the future, in some other fashion than regular UK-based income tax, depending on where you are domiciled, the exact nature of the off-shore status etc etc.

They cannot therefore be sure that you will HAVE £3,700 available, even if it is initially 'cleared'.

In case you'd missed it, they are also not doing self-certification much any more, and this if effectively that - you want them to believe what you can afford.

Having to go cap in hand for Billions in taxpayers money has caused them to rethink taking things on trust.