Mortgages and tax credits

Would like some advice on how a lender would view my situation :

Income - salary £10k
Tax credits - £10k
Child benefit - £1k
Maintenance - £4200
DLA for child - £4000

All figures per annum.

Child aged 8, no childcare costs as I work from home and set my own hours.

No debts at all, excellent credit history - several accounts, settled and open, no missed payments, lates, CCJs etc ever. Track history of mortgage accounts.

I am 34 so ideally looking for a 20 year mortgage of £80k on a £175k property. However, I am conscious that I may hit a problem if a lender looks at sustainability of tax credits over mortgage term. Could I get round this by going for a 10 year mortgage term so the mortgage would be paid off by when my child is 18 (ie when tax credits end). Or could I still take a longer term mortgage based on details above?

Replies

  • kingstreetkingstreet Forumite
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    Which lender?

    The answer to your question as it is posed is, "it varies from lender to lender."
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • leveller2911leveller2911 PPR
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    Any future government may well reduce tax credits which in turn could pose a significant problem with paying the mortgage.

    All future governments have some tough decisions to make with benefits so in receiving £19k a year from benefits could affect you greatly.
  • I need to find a suitable lender - not sure which one. Which accept tax credits?

    I know it is risky to be heavily reliant on benefits but it is a fact of life as a parent of a disabled child. I do work but there is a limit with having a child with very specific needs to accommodate.

    I know benefits may reduce but to date government have protected Benefits for the disabled, especially for children. For example in the changes due to universal credit, the cap on benefits did not apply of you receive a disability related benefit. That is why the tax credits is so high as it has disability premiums added on. I am aiming to pay mortgage off by time my son is 18 so I am not as vulnerable.

    I have noticed lenders such as Santander, Woolwich say they take benefits into account subject to sustainability over term of mortgage how do they assess what is sustainable?
  • kingstreetkingstreet Forumite
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    If you want tailored, case-specific advice, I suggest you find yourself a good whole market broker in your area. They will find the lender most likely to lend the amount you need, on an affordable term and at the best rate/terms.

    It isn't possible for a broker on here to provide advice to individuals without falling foul of the "know your customer" rules and being considered to be giving advice.

    Generically, some lenders will take some of your benefits into account to some degree. This will depend on the nature and duration of them. You'll need your broker to go over your options with you.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • ACGACG Forumite
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    Lenders will vary on which of those they will accept, thers is no general rule as such.

    I would save your time and sit down with a broker as this could be quite complicated and it would be better to get everything down on paper and give it to someone to do the legwork.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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