Can net salary be "grossed up"?

m5rcc

I have a friend who has a problem with gaining a mortgage. He is about to start a new job that pays a net salary, where he is not taxed at all due to the financial structure of the employer. His previous employment was a normal job where he received a gross salary like everyone else, and got taxed as normal.

As mortgages use gross salaries to leverage up, he does not want to be disadvantaged as he does receive a gross salary, as he could be effectively 50% worse off (he's in the highest tax band).

Does anyone know of any banks or brokers that can leverage him up at a gross value, so if he takes home £120k/yr he should be on £211,147.60 gross of which £83,573.80 is tax and £7,603.45 if I have worked it out correctly.

Kindly advise.

dunstonh

He is about to start a new job that pays a net salary, where he is not taxed at all due to the financial structure of the employer.

Can you explain that more.

As mortgages use gross salaries to leverage up, he does not want to be disadvantaged as he does receive a gross salary, as he could be effectively 50% worse off (he's in the highest tax band).

Nowadays, most lenders look at affordability and take home pay is what they look at with the expenditure.

Thrugelmir

m5rcc wrote: »

He is about to start a new job that pays a net salary, where he is not taxed at all due to the financial structure of the employer.

Tell us more. Not sure what relevance the financial structure of employer has in terms of remunerating employees.

m5rcc

He receives a net salary. He works for a bank that is subject to an internal bank tax and is exempt from UK income tax. So if rates go up, employees get a 'virtual' salary rise because they don't pay tax.

So in essence, his net is his gross.

My question is can the mortgage provider actually "gross him up" as given in my initial example?

Mrs_Z

Hi, I don't think that the net salary can be 'grossed' up but if his take home salary (net) is around £120k/p.a, then according to a salary calculator, his gross would be around £212k.

His employment place should be able to provide a letter explaining the tax status which may or may not be acceptable to the lender. I work for a similar organisation where my salary is exempt from the national taxes and this was a problem when I tried re-mortgaging my BTL loan, basically the building society in question could not get their head around that such a scenario would be possible and said they would not be lending, despite impeccable credit history.

As for the residential mortgages, we have not had problems but I think this is mostly due that my husband had a 'normal' job and we had a low enough ltv.

Your friend's place of employment will most likely to be able to recommend brokers for him that can direct him to lenders that are used to this type of employment and tax status.

m5rcc

Mrs_Z wrote: »

Hi, I don't think that the net salary can be 'grossed' up but if his take home salary (net) is around £120k/p.a, then according to a salary calculator, his gross would be around £212k.

His employment place should be able to provide a letter explaining the tax status which may or may not be acceptable to the lender. I work for a similar organisation where my salary is exempt from the national taxes and this was a problem when I tried re-mortgaging my BTL loan, basically the building society in question could not get their head around that such a scenario would be possible and said they would not be lending, despite impeccable credit history.

As for the residential mortgages, we have not had problems but I think this is mostly due that my husband had a 'normal' job and we had a low enough ltv.

Your friend's place of employment will most likely to be able to recommend brokers for him that can direct him to lenders that are used to this type of employment and tax status.

That is what I did say that surely they would be able to recommend or even provide the mortgage itself. Hes goign to buy a property for £500k and put £100k upfront in cash. It's just he's at a disadvantage whereby if one is leveraged up say five times, then he's missing out on a potential £460k of usable debt.

oldtractor

If he's not liable for UK income tax,then in effect,his salary is "gross" as nothing is being taken away from it.

callmechar

Wow lucky him! £120k a year....I wish I had his job!