Why do lenders need proof of income...

LizEstelle

homer_j wrote:

I think what GG is trying to say is that whilst they understand why you may not want to post on a public forum about your financial details, there should be no reason why you cannot divulge this information to a lender who operates under FSA regulations and UK law.

Then you think wrongly.

He/she/it quite clearly stated that he/she/it was assuming my income was 'illegal or from a dubious occupation'. See for yourself. He/she/it then had the nerve to try to get out of it with the throwaway one liner 'no offence intended'.

Is that the kind of person I can expect to encounter on here as a matter of course, then?

Ye gods.

madauri

There are more than 5,000 members here, all different with different ways of expressing themselves. Please don't be discouraged by the the sheer rudeness of one.

LizEstelle

madauri wrote:

Sorry but it IS answering the question. Money lenders are not your saviours. They have a business and they have it to make money. A business person cannot affort to give away their services/merchandise happily without making sure they're going to get their own income. They would be broke in a week!
You are right in your appreciations. It is true that proof of income does not equate proof of future paying - anybody can stop paying at any moment, there is no definite evidence. But it's the thing that comes closest, and as businessmen they need to make as sure as possible they're getting their money back as smoothly and promptly as possible.
The credit score is supposed to be used here, no?

I agree with almost all of this except the monotonous worship of payslips. IMHO payslips do NOT 'come closest' to proof of ability to pay. One's past record with a previous lender comes MUCH closer.

LizEstelle

madauri wrote:

There are more than 5,000 members here, all different with different ways of expressing themselves. Please don't be discouraged by the the sheer rudeness of one.

I'll try not to be. The modern world, sadly, seems to be ever more adorned with such 'gorgeously' civilised people.

madauri

LizEstelle wrote:

IMHO payslips do NOT 'come closest' to proof of ability to pay. One's past record with a previous lender comes MUCH closer.

What about those who have never borrowed?

I would say never having into debt before and having paid all your bills in time would be the best proof, but if I were a lender I would want to know the person asking me will be able to pay.

Think of banks: they will lend you the money you need basically only if you have it already. That irks me. But banks never lose.

herbiesjp

LizEstelle wrote:

I agree with almost all of this except the monotonous worship of payslips. IMHO payslips do NOT 'come closest' to proof of ability to pay. One's past record with a previous lender comes MUCH closer.

BUt they do look at you previous mortgage history - a credit search is carried and will highlight any missed payments/late payments defaults/CCJs etc for any credit commitments you have.

So they use a combination of previous credit conduct (that you are requesting) along with proof and disclosure of source of income

HTH

homer_j_3

I fully understand the words and perception of what was said. I cannot apologise for this person as it was not me who said it.

Clearly the person has caused offence but I do stand by what I said in the fact that they did genuinely mean that only people with something to hide would have such a problem with disclosing such information to a lender.

I am for one scratching my head to why you have this issue with declaring your income with a lender but that said it is your personal choice.

I and others have given you explanation to why lenders require the information and I would ask that you read this and either accept it or ask further questions if you dont agree with it and why.

This forum is to help educate the consumer and hopefully empower people to have more financial responsibility and I think GG has honestly not meant to cause the offence they clearly have.

HelpWhereIcan

LizEstelle wrote:

I agree with almost all of this except the monotonous worship of payslips. IMHO payslips do NOT 'come closest' to proof of ability to pay. One's past record with a previous lender comes MUCH closer.

If this was a valid argument, then investment companies would not have to use the warning that past performance is no indication of future performance when it comes to share based investments. Remember, the value of shares can go down as well as up - as can your ability to pay. That is why lenders look at liklihood. Which is why they want confirmation of income.

dmg24

'Dear Mr Bank,

I want you to lend me £100K +. However I do not see why I should tell you anything about myself. You know nothing about me, yet I expect you to trust me with thousands of pounds of your money.

I think this is perfectly reasonable.

Kind Regards,

Liz Estelle.'

I have never heard such nonsense! No one knows whether they will have a job tomorrow, no one knows what the future holds, so the banks can only assess you on your current situation. Otherwise they would never lend anybody anything!

LizEstelle

Madauri - what you've said is very true - but where a lender COULD take cogniscence of previous payments history I see precious little reason why this should not be done.

It is QUITE possible for a person to be in receipt of income which is legal, non-'dubious' ... and yet undocumented. In such a situation, getting a mortgage is a horror story.