Mortgage + Company car allowance

Peter1988

Hi,

We're looking to buy a house and I've recently had a promotion which includes a yearly car allowance of £5k.

Can this be used to secure a mortgage?

i.e. if my salary was £10,000 per year, with a £5,000 car allowance, could I get a quote based on a salary of £15,000?

Thanks

Peter

Thrugelmir

Although a car allowance forms part of your salary, it is not like your base salary. Many lenders are of the belief that any additional funds received, will be used solely to maintain the car and not for any other purpose such as a mortgage repayment. As the assumption is that you are required by the nature of your job to travel.

One of the resident brokers may be aware of a lender that does allow a car allowance to be included.

Peter1988

wow...I hadnt even thought about it. It would be with Nationwide if anybody can give their experiences?

bigadaj

This depends on the wording on the app,ication, if this states gross income then you could probably legitimately include. May also be dependent on what your employer pays, eg if you claim the full revenue rate for any mileage incurred, rather than just say petrol, then your additional costs for running the car would be included and the allowance is simply income as you are taxed on it after all.

The really sensible approach would be for you to look at the amounts you can/ want to borrow, run these figures through a mortgage calculator to see what payments would be a increased rates, certainly 7-8%, ideally 10% and rates have been to 15% within the life of current mortgages. Once these numbers come out check if you can afford them even if living on beans for a while and then you can work out real affordability.

holly_hobby

Your salary is your salary, additional allowances form part of your renumeration (which is a term defined to encompass both your salary and all additional payments/allowances etc from your employer).

The problem with employer allowances, is that some are dependant upon the actual position held, to which a change of duties, or role, may result in the allowance being withdrawn, as no longer relevant to the role.

Obv allowances related to housing, such as inner city weighting (typical to London), or mge allowance, are more likely to be considered. as they would be considered to be less exposed to withdrawal following a change in position - and are specifically related to servicing a home.

My honest opinion and from past experience, I think you will struggle to get car allowance included as part of your base salary for mge purposes. This is due to the fact that a car allowance occurs where the position ordinarilly would call for the provision of a company car (which is also taxable as a benefit in kind). The CC allowance is provided in place of a company vehicle, and is designed to both fund and pay for the annual running of a vehicle utilised as part of the position, but owned by the employee. A good example of proficient use of this arrangement are Local Authority/Gov employees (i.e social services field officers, or field officers in other areas, such as midwives etc).

Accordingly, I think the best you could hope for (and if a healthy LTV) would be for it to be added as a + 1, following the application of their standard multiple to your base salary & relevant allowances. Of course, if the running, servicing of your vehicle is circa 5k, it would be foolish to try and have it included in your mulitple in any event, as the capital being absorbed by vehicle maintenance, would mean it wouldn't really be available to be utilised in servicing the mge in any event.

But, delighted to be corrected if there are current lenders whom will permit the inclusion of a car allowance, with main salary for mulitple purposes.

Hope this helps

Holly