Why do lenders need proof of income...

david29dpo

LizEstelle wrote:

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.

so have we!

STAR_BUCK

haha! what a wierd thread! LizEstelle needs to get a grip and a reality check! PAYSLIPS are important so just deal with it lady!

Joe_Bloggs

Some may consider self certifying in such a situation. I am pretty sure that an accountant has to be involved and they will not risk their neck in certifying a stream of unproven of income.

Does anyone have any views on the role of a 'deed of covenant' in giving money towards student fees or living costs ? Tax law moves so fast.
J_B.

herbiesjp

Joe_Bloggs wrote:

Some may consider self certifying in such a situation. I am pretty sure that an accountant has to be involved and they will not risk their neck in certifying a stream of unproven of income.

Does anyone have any views on the role of a 'deed of covenant' in giving money towards student fees or living costs ? Tax law moves so fast.
J_B.

The income source would also have to be disclosed, but the OP wants that kept as a secret - that's her perogative, but no lender will assist

AndrewSmith

Joe_Bloggs wrote:

Some may consider self certifying in such a situation. I am pretty sure that an accountant has to be involved and they will not risk their neck in certifying a stream of unproven of income.

In either case the source of the income would need to be disclosed and in an increasing number of cases would need to be evidenced.

There have been many recent threads on the issue of 'declaring income' and there does seem to be general confusion regarding it.

The confusion lies around the difference between evidence of income and evidence of employment status.

Although a lender may not require evidence of income on a self certify mortgage they will most definately need to know the source of the income and in a large number of cases would want proof of the source.

For an employed individual this may come in the form of a quick phone call to the employer or a brief reference asking for confirmation of contract status, length of service and position.

For self employed it would normally involve contact with the accountant to verify that individual is registered with the IR as self employed and to confirm length of time trading etc. This is one reason why the vast majority of lenders ask for your national insurance number, as this can easily be used to check your status with the IR.

In short people must not confuse proof of income with proof of employment.


EDIT:- Sorry Herbiesjp, you beat me to it :rotfl:

advent1122

What was the question again? I lost track mid way.

regularsaver1

LizEstelle wrote:

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.

if a previous mortgage was for £20k and a new mortgage was for £190k - would this still be the same then - as the payments would be different

regularsaver1

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?

This is not earned income. it is a gift that can stop at anytime,. therefore a lender would probabaly not accept this. However, a lender can put a good rationale together if you explain the full situation to them

just as some lenders wouls not take a share or investment portfolio into consideration, some will not accept working / child tax credits, or rental income, or maintance. - they might with a reason

some lenders will accept overtime and bonus - but only say 60% of this, wo will need your payslip to see the breakdown

This all depends on the lenders criteria, that they have chose to abide by

You sound like you think that income is the only thing a lender checks - they do not. They do an income reasonability check as well as detail of dependents, credit commitments, credit scoring, valuation of property ect ect ect

ginger_nuts

when I last remortgaged my new lender wanted my payslip .My payslip showed overtime which they would not include in the calculations .
If I had just given my bank statements it wouldnt have shown how much income was overtime .

tomstickland

Does bud miser live near Evesham?