Bonuses and Tenants

Monster85

I'm looking to take my first step onto the property ladder shortly but I could do with some advice.

My father recently passed away and left me £35k to put towards a deposit on a house. I work as a salesman so my income varies. I would say I usually earn £28k-£33kpa (£20k pa basic) but recently it has dipped considerably due to time off to spend with him and the affect watching your father die from cancer can have on you. I'd say my last 4 payslips have only been indicative of about £24kpa.

So I have 2 questions that I'm hoping some of you lovely learned people can help me with :beer:

Question 1

How far back into my income will the lenders look? I am aiming to start hitting good commission again at work for 3 months before applying, do I only need 3 months wage-slips, or will they look further? will there be anything extra I need to consider given that a lot of my earnings are commission based? Also would it be any sort of fraud telling them that my income is £28k-32kpa knowing that this calendar year it my P60 will show less even though I know that there was an extenuating circumstance responsible for this artificial low? (sorry that was loads of questions but I'm sure you see what I'm getting at)

Question 2

The property I have my eye on costs quite a bit (£165k), which would mean lending £130k which for my income I think would be stretching it. I could easily let 2 of the rooms for £400pm each (I live in a very similar house now and that's what my house mates in the smaller rooms pay) this would actually pay the entire of the mortgage according to the mortgage calculators I have looked at and leave some money to contribute towards bills at present meaning I have quite a large safety margin for any interest rises in the foreseeable future, but would a lender factor this into an application as an additional income?

TheFactory

I can possibly answer question 1 as I applied for a mortgage 3 months ago.

Halifax wanted me to provide the previous 3 months of payslips, and I couldn't get the mortgage with that. However I also took my last 2 p60's with me as like you my income varies and I was then approved.

I know that was only Halifax and things might vary but I hope that allays some of your fears somewhat.

Monster85

Thanks for this. Did they request the 2 years of p60 or did you volunteer them? only my predicament is that I was promoted into this position a year and a half ago from about £25kpa so I haven't actually got a p30 reflecting my current salary :undecided

dimbo61

Different lenders work in different ways and some will take into account Bonuses , some only 1/2 and some none at all.
You need to be able to afford the mortgage on your basic income so £130K on £25K is 5X income
They will not take into account Lodgers but that will help with the household bills when you do find a property.
You can earn up to £4250 a year TAX free under the rent a room scheme so may be 2 bedroom house with ensuite to master and seperate bathroom !!!!

TheFactory

Monster85 wrote: »

Thanks for this. Did they request the 2 years of p60 or did you volunteer them? only my predicament is that I was promoted into this position a year and a half ago from about £25kpa so I haven't actually got a p30 reflecting my current salary :undecided

I just realised that I may be pushing the criteria slightly on my 'on paper' salary, so thought it would be a good idea to take p60's - it was!