Why do lenders need proof of income...

LizEstelle

tomstickland wrote:

If the OP was trying to hang onto the house with family help then the correct thing would be move the mortgage to the supplier of the family help.

'Correct'? Explanation?

homer_j_3

If you were to receive £1000 per month from somebody and you do not declare that amount then you could be or the person giving you the money could be commiting tax evasion.

What is to stop that person stopping that income, at least with a job they have set steps before they can stop your income.

Not that the loss of income will have any differing effects but its easier for someone to say I will pay you £1000 a month and then a couple of days before your mortgage is due say I cant afford to pay you that this month.

With a Job there is a less likely chance that you would lose your income as suddenly or as easily as this. Of course there are times where you may argue it is possible but you have to look at this on a broad brush approach due to the fact that the lender has a risk to consider and it will lessen its risk through having these kind of policies in place.

This said, you still have the legal implications to consider, which you have not replied to?

If you or someone you know are wheelchair bound and I hope that you wouldnt joke about something like this then there may be benefits like DLA and Income benefit etc that may be able to be taken into consideration.

HelpWhereIcan

LizEstelle wrote:

Ok, let's take a teensy, hypothetical example. I give a relative, say, £1000/month. Free, gratis, for nothing. No payslip involved. Totally undocumented. An impossible situation, according to you? Just couldn't exist, then?

In that case, you would have no problem because lenders will allow you and your reative to take a joint mortgage using their income to cover it. As long as their total income would cover both mortgages (calcuation different with every lender), therefore supporting the fact that them paying you £1000 pm is sustainable.

This is why, as I said before, it is important that you tell the lender the source of the income and allow them to check it. If the relative is someone you do not want to know about the mortgage, then again the question must be why not?

homer_j wrote:

If you or someone you know are wheelchair bound and I hope that you wouldnt joke about something like this then there may be benefits like DLA and Income benefit etc that may be able to be taken into consideration.

spot on homer. again, provide the lender with the ful story and the proof they want and theywill be more receptive han if you reply "I just can afford it Ok?!"

LizEstelle

homer_j wrote:

If you were to receive £1000 per month from somebody and you do not declare that amount then you could be or the person giving you the money could be commiting tax evasion.
.

And then again, I might be an upright citizen who declares all income but who does not wish said income to be divulged or used as 'proof' of anything.

What IS it about this site? Some individuals seem hell bent on seeing or assuming the worst in others and making snide comments as opposed to offering genuinely helpful thoughts

I think I've had enough.

HelpWhereIcan

I understand that things may be vry frustrating for yu, but lenders have their reasons - even if you may not like them.

We may appear to be off hand in replies at times, but that is often doen to expediency and the need to be (sometimes) blunt about things. Most of us have come across this before as in

http://forums.moneysavingexpert.com/showthread.html?t=162414

HelpWhereIcan wrote:

Believe it or not, lenders would actually prefer not to reposses a house. As well as the costs involved, there can actually be issues in repossessing and the courts will want to see that all efforts have been made by the lender to come to an arrangemet with you if you 'default'. It is not as simple as you miss 6 months' payments and they take possession in month 7. On top of that, no lender wants the adverse publicity that may come with repossessing the house of someone on disability benefits when they have so much equity and "it was probably the bank's fault for lending them so much in the first place."

Sorry if this sounds a little harsh, but I want to help you understand that a bank will carry out a 'risk assessment' on every application and will make their decision based on which cases will make them the most money with potentially the least hassle and most security for them. Afterall, lenders have to 'buy' the money in the first place and want to make the most profit on the rate they are being charged that they can.

This means that, given the choice, lenders would rather lend to the person with little equity but the income to make the repayments than the person with plenty of equity, but little or no income who represents a higher risk of default leading to increased admin costs in terms of attempts to collect arrears, court costs to repossess, adverse publicity, sale/auction costs, increased FSA scrutiny as they are seen as a potentially irresponsible lender, increased Higher Lending Charge premiums as the insurers see faults in their underwriting etc etc.

Gorgeous_George

LizEstelle wrote:

Ok, let's take a teensy, hypothetical example. I give a relative, say, £1000/month. Free, gratis, for nothing. No payslip involved. Totally undocumented. An impossible situation, according to you? Just couldn't exist, then?

Apologies for jumping back in.

That £1,000 would be taxable I believe.

GG

homer_j_3

what is unhelpful about what I have said. You asked for reasosn why lenders insist on understanding the source of income.

You clearly are a little sensitive about this for whatever reason and It may be better for you to leave if you are only going to get upset for not getting the answer you want.

We as a forum will always try and help people and if you want to post with regards to the situation that you are trying to resolve, whether it be with or without income disclosure, I am sure you will have an abundance of suggestions but I cannot see what has been unhelpful from me (or others) in answering your query. You suggest scenarios, we answer why a lender may or may not have an issue with this.

LizEstelle

'Off hand' doesn't come close.

madauri

I understand that the OP gets defensive against such an offensive post she was rewarded with at the beginning, but sincerely, everybody else has been giving her answers to her questions, and she not only does not accept them as valid but becomes rude herself. Sorry, I cannot invent a lie to tell her what she wants to hear. Things are as they are and I seriously doubt people will go on wasting their time in such a negative fashion.

I am off.

tomstickland

I think I've had enough.

I fail to see what else you are hoping to achieve.

'Correct'? Explanation?

1 right and not wrong; in agreement with the true facts or with what is generally accepted:
- a correct answer

- "Is that the correct spelling?" "I don't know - look it up in a dictionary."

- It's not correct to describe them as 'students'.

- FORMAL "Your name is Angela Black?" "That is correct."