How far would they check your employer during a mortgage application ?

property.advert

I know they'll write and ask loads of questions but just how much do they dig into the background of your employer, if at all ?

They used to do nothing other than write but what about now ?

Anyone any ideas or do we have a mortgage underwriter here ?

happybroker

interesting question, what is it you are concerned about?

switched_off

Hi PA,

I think you are in for a pleasant surprise. As long as you have proof of income and are not relying on;

Forthcoming payrise
Excessive commission or overtime
Handwritten payslips

You may find they wont write at all.

LTV has an impact also, if its under 75% you may get really lucky.

Conrad

The work address needs to make sense. For example a Manager employed and claiming to earn £50k would not work from his mates home address!

Lenders may also phone employers.

property.advert

happybroker wrote: »

interesting question, what is it you are concerned about?

My last mortgage application was in 1999 and was with Northern Rock and they were incredibly amateur. They did write to my employer asking whether I was on a notice period, my salary, bonus, etc. but that was it. I cannot remember if they wanted a P60 or payslips but they did want bank statements obviously.

Now obviously if you say you work for the government or some huge well known multi national firm they don't need to look at the company accounts to see whether a £10bn company is likely to be able to afford to pay your for the next few months etc. but what about if you worked for a small company or a company which though well funded was relatively new ?

I am only fishing for information and would obviously be able to provide the necessary documents and have the necessary credit scores and I guess the application would be in the range of borrowing £150k to £250k on a maximum LTV of 70% at the top end and 50% at the bottom end.

My concern is whether they would want or have procedures to look into the company and make a lending decision based not just on me but also on the company I was working for.

I may go in with a start up and say in 12 months or so, I might like to get a mortgage. I currently have no mortgage (renting) and have been overseas so I need some time to re-establish myself in the UK.

It is a serious consideration should I find myself in the position of wanting a mortgage as I would not want to move company prior to obtaining the mortgage but do they have a right, obligation or such to look at your employer or indeed, would they, particularly in this economic climate, go looking for information from credit agencies on the financial health of the company which employs me ?

Company accounts are public documents and are readily available and as a start up, the business plan may well be on target but I could not say whether the company will be producing massive profits at the time they would look, if they indeed did look.

Any ideas ?

benjo

I dont know the answer to your question but you seem to be inferring that IF the lender looked hard enough they might find some element of risk (Im sorry if I have misinterpreted the feeling of this post).

If YOU think the lender might see lending to an employee of this company as risky - then do YOU feel it is risky? is there a risk that you couldnt make your mortgage payments etc due to the nature of your employer?

Afterall, if there is a risk to the lender of not getting their money back - there is also a risk that you will loose your lovely new home.

Perhaps the question is not 'can the lender base it's lending decision on the company I work for?' but......

'Should I base my borrowing decision on the company I work for?' .... answer for me would be very much 'hell yes'.

opinions4u

property.advert wrote: »

I know they'll write and ask loads of questions but just how much do they dig into the background of your employer, if at all ?

They might do a number of things, or they might do very little.

It depends on the nature of the application and the specific employer.

Anyone any ideas or do we have a mortgage underwriter here ?

I used to be one.

My last mortgage application was in 1999 and was with Northern Rock and they were incredibly amateur. They did write to my employer asking whether I was on a notice period, my salary, bonus, etc. but that was it. I cannot remember if they wanted a P60 or payslips but they did want bank statements obviously.

It's not obvious that they should want bank statements. While it varies from lender to lender, if I asked to see bank statements it meant I felt that something in the application didn't (or might not) stack up.

Now obviously if you say you work for the government or some huge well known multi national firm they don't need to look at the company accounts to see whether a £10bn company is likely to be able to afford to pay your for the next few months etc.

Ironically two of the nation's biggest mortgage lenders effectively went bust a year or so ago, as did a number of major retailers such as Woolworths. As I often say to Mrs o4u, size isn't everything.

but what about if you worked for a small company or a company which though well funded was relatively new ?

There is a judgement call that is often based on an underwriter's knowledge of the business.

My concern is whether they would want or have procedures to look into the company and make a lending decision based not just on me but also on the company I was working for.

Your employer and your employment are part of an overall manual underwriting process. Many cases with some lenders, espeically those where the lending is under 75%, will sail through an automated underwriting process and not have any significant human intervention. It depends on the lender and the overall credit score result though.

I may go in with a start up and say in 12 months or so, I might like to get a mortgage. I currently have no mortgage (renting) and have been overseas so I need some time to re-establish myself in the UK.

If you have less than 3 years residency your mortgage will almost certainly have human intervention.

It is a serious consideration should I find myself in the position of wanting a mortgage as I would not want to move company prior to obtaining the mortgage but do they have a right, obligation or such to look at your employer or indeed, would they, particularly in this economic climate, go looking for information from credit agencies on the financial health of the company which employs me ?

They may do a bit of delving around the employer. I've not heard of this involving credit checks on an employer though. After all, the banks themselves will have thousands of county court judgements showing against them following bank charges cases. As Benjo posts above, if you think your employer is potentially dodgy why would you commit to borrowing a huge amount against an income they provide? Seems mad to me!

property.advert

Thanks for the additional responses.

I have no worry at all about the company not being able to pay me or going under or my losing my position. I would have over 2 years of fall back money in any case.

No underwriter would be in a position to know much or anything about the business, though they may be knowledgeable on the business sector or in general terms. A start up is not going to hit anyone's radar.

I guessed the 3 years thing as they want the previous addresses etc. I'm aiming for 2 years back in the system, though it could get to 3 years and were I a couple of months short, then I would probably consider waiting.

The thing is that it would be possible to set things up in a number of different ways to achieve my personal future objective.

opinions4u, I would be grateful if you would perhaps care to elaborate on this comment of yours. Just what might they do or want to know ?

They might do a number of things, or they might do very little.

It depends on the nature of the application and the specific employer.

Thanks again.

property.advert

Has anyone ever had their employer raise the issue of a mortgage lender asking unusual questions or does anyone know of lenders raising issues regarding your employer ?