Loosing secondary income during application...

hanvyj

We are in the middle of our Mortgage application with First Direct. They have carried out the survey but we haven't heard back or got the documentation or (I think) a formal offer of a mortgage.

My wife got a phone-call out of the blue (totally) informing her that the shop where she works is being closed down in two weeks. She does get one months formal notice from her formal meeting with her boss to discuss it (which was last Friday) though we found out a week before.

Now, it really isn't a huge chunk of income - she only worked part time with a 24 hour a week contract. It came to about £7k a year on top of my core £30k income.

Checking out the First Direct borrowing calculator though, for "2 application" with one income as 30k and one as 7k we can only borrow 122 of the 135 we need for the house (with 15k [edit 10%] deposit). With "one applicant" this increases 137, which is over what we need.

My first question: Would this calculation based on the number of applicants or the number of applicants with an income? I've heard things like you can borrow "4x your wage, or 3x your combined wage" kind of things - and this calculator seems to follow that type of rule - does just having another applicant mean to treat it as a joint income regardless that one isn't earning?

Second question: When should I tell them? :S Obviously I can't go signing things, as our circumstances have changed - but she still has a wage for a month and has had 2 interviews for a new job and has another 2 lined up. Given she's only been looking for a week I don't think its likely she'll be out of work for long... But the bank isn't going to view it like this is it?

I'd rather ring them up and say "oh, our income has increased/employment changed to this:" Than "Erm, we've lost one income due to redundancy..." but it may take a few weeks for her to secure a new position.

What are people's opinions?

Thanks

amnblog

Failure to declare your altered position clearly to the Lender is mortgage fraud.

You now need to make a decision.

hanvyj

amnblog wrote: »

Failure to declare your altered position clearly to the Lender is mortgage fraud.

You now need to make a decision.

Thanks for the reply, this is what I fear is the case - I'm trying to work out the details so I don't accidentally commit fraud, but not loose the house we've spent 2 months buying over what could be two weeks without a relatively small income.

I know it is fraud if I sign anything after this point - but given I have not entered into any formal agreements is it fraud not to ring them up right now?

Is this going to be in writing somewhere or is it some kind of law?

I assume there is some time-period involved, or I've already committed fraud by not telling them Friday!

Will they care that it might take a week or two for a new job and give us time to work this out or will it be a "right, mortgage cancelled!" kind of conversation? Are they going to care about interviews etc or 'very likely' jobs/transfers as part of the redundancy system that obviously don't have contracts signed yet?

hanvyj

I checked the documentation and you are correct. We are required to notify them immediately of "any change in financial details".

Hope they don't deny us the loan.

Would the best thing to be for my wife to take a position within the same company (with a long commute!) over changing jobs?

hanvyj

Well, she managed to get the transfer to London. 2 hour commute, for a £8 an hour job full time... seems a bit silly but it means she isn't unemployed for any time and has no new contracts (just an amendment). Same company, same position.

The bank was happy given our income would increase and don't require any new proof etc. Yey.

Annoying that we may have to turn down better jobs because until we get in the house, but so long as the move is safe...