Mortgage Application and Tax Credit award letter help

froslass

Hi folks,

Looking for a bit of advice regarding our tax credit award letter.

Been to see two separate brokers who have both suggested we try obtain an AIP from Halifax as they will definitely accept tax credits as income.

The tax credits were a joint claim so when the letters arrived both mine and my partners names were down on the address section. working tax was laid to him, child tax to me. I called to change this at renewal time so that the claim was just in his name and it all paid to him as he is making a single application for a mortgage.

On the actual award it says working tax credit And child tax credit payable to *partners name* . But it still shows my name and his name in he address.

One of the brokers said this would be a problem, the other said it wouldn't be a problem as long as they are paid solely to him.

Does anyone know if it will be a problem that my name isn't on the claim, but is on the adress section?

GMS

Why would it be a single claim? If you live together it should be joint.

Why is the mortgage application in a single name?

froslass

Because I have adverse credit.

Long story short, had my bank cleaned out, lost my job at the same time etc...defaulted on all my loans, couldn't get a job. This was 3 years ago and I'm still on repayment plans now for he debt.

froslass

Plus we aren't married, and even if I could get a mortgage, we would still rather it this way.

GMS

Tax credits are a joint claim. Married or not doesn't matter. You can't pick and choose how you get to claim benefits.

If the tax credits are required for affordability purposes then you need to question whether you can proceed as you wish.

You can't pick and choose what is declared and/or shown to a lender.

froslass

I think you may have missed the point.

No where in my posts have I suggested "picking and choosing" what to show to a lender! I was simply asking if it would be an issue that my name is on the address part.

We have a low LTV for the property we are looking at as my Partner has considerable savings and inheritance. Why would we keep renting if we an afford to buy? This is something we have researched and put a lot of thought into. We didn't just wake up one day And decide to go for a mortgage.


Tax credits can still be claimed by people with very respectable wages. What's your problem?!

bigadaj

OP to be fair if you are desperate, as you sound, to get tax credits included then that would suggest you are stretching yoruself, most lenders will go to four times income or more, so it would sound like you are well beyond four times his salary.

Things may be affordable now, but have you budgeted for when mortgage costs double or more, as they will within the next few years.

GMS

froslass wrote: »

I think you may have missed the point.

No where in my posts have I suggested "picking and choosing" what to show to a lender! I was simply asking if it would be an issue that my name is on the address part.

We have a low LTV for the property we are looking at as my Partner has considerable savings and inheritance. Why would we keep renting if we an afford to buy? This is something we have researched and put a lot of thought into. We didn't just wake up one day And decide to go for a mortgage.


Tax credits can still be claimed by people with very respectable wages. What's your problem?!

I have no problem whatsoever. I am merely pointing out what a lender will see.

Yes there will be an issue with your name being on the address as it will be viewed as a joint claim with only one person using the joint income. In a similar way you could not use any earned income from somebody not party to the application.

Can you not get the mortgage you want without using the tax credits? Also make sure that affordability has been assessed properly before applying. If you are not on the mortgage you would be classed as a dependant along with any children which could lower the loan amount available.

kingstreet

Halifax criteria on Working/Child Tax Credits, for example;-

Working Tax Credits - Primary Income 100% allowed - Acceptable proof required (listed in order of preference) - Latest 1 month full bank statement or HMRC tax credits award letter.

Child Tax Credits - Secondary Income 60% allowed - Acceptable proof required (listed in order of preference) - Latest 1 month full bank statement or HMRC tax credits award letter.

Presumably, the OP is trying to squeeze every penny they can as one income isn't being taken into account? Dangerous plan, if that's how it is.

froslass

Apologies if I come across as desperate lol, I'm not. Just wondering if the tax credits can be used with name on it.

I'm a student, and my bursary won't be taken into account by Halifax as income. And once I qualify ill be on a much better wage than my partner.

We could afford it on just his wage, but we wanted to use the tax credits too to see what the maximum we could borrow would be, even if we don't plan on taking that amount. This again was on the advice of two brokers.

I called Halifax, spoke to a mortgage advisor there. She told me only children count as dependants for them - I was surprised at this. She also told me as long as both working tax and child tax are down as in his name, and going into his account, then my name being on the address part won't matter.

HappyMJ

It seems silly to be able to use tax credits for mortgage purposes.

I could not work for a whole financial year or have income less than £6,420 last tax year. Then this tax year I would be entitled to full working and child tax credits as long as my income was not higher than £10,000 over last tax year.

So I could earn £16,420 and get for 2 adults and 2 children a total of £10,585 in tax credits and get a mortgage based on income of £27,000. Borrowing 4 times income would mean I could borrow £108,000.

But then....the next tax year comes around and I fill in my tax credits renewal declaring £16,240 of income and my tax credits drop by £4,100 in 2013/2014. How affordable would the mortgage then be?....Then in a few years time the kids leave school and then my household is not entitled to any tax credits and I am paying a mortgage of £108,000 on income of £16,420.