What is the correct salary?! 1 March 2015 at 12:45AM edited 30 November -1 at 1:00AM in Mortgages & Endowments 7 replies 1.2K views

bubblegum6000

Hello

Sorry for asking what may well be a stupid question!

My husband and I are looking at moving and have just contacted a mortgagae broker to look at how much we can borrow.

Now comes the problem - my husband has a 'base salary' and then a guaranteed 'advantage fund' - this being a set amount on top of his base salary that he can use to buy holiday, extra pension etc OR take as cash. He also always receives a bonus annually but that amount fluctuates.

The mortgage broker is saying he cannot take the advantage fund in to calculations as it will be seen as a bonus - is this correct? It makes a difference as it is £7k! We take most of it as cash so dont see why it cant be used in multiples! Plus it is guaranteed and his HR can confirm this.

Any advice would be great! Just want to see if its the broker not fully understanding the situation or if we need to recalculate!

Thanks :T

Thrugelmir

bubblegum6000 wrote: »

We take most of it as cash so dont see why it cant be used in multiples!

You could opt to not take the bonus in cash but some other benefit. The lender therefore takes the pessimistic view. The lenders view is a policy based on a risk assessment. It's not aimed at you personally.

roonaldo

Your point is flawed as next year he might take extra holiday, meaning he has £7k less income than this year and may struggle with repayments, thats the way the lender will view it.

Get a slighter lower mortgage I guess.

bubblegum6000

Thanks for the responses so far.

I do understand where you are coming from, it is just annoying because I personally see no difference between me using my salary to buy holiday/pension and this - at the end of the day it is still money that we get no matter what - we can keep it or spend it, same as any wages

It isn't an issue for what we want to borrow but does mean we are now at the top of what we can borrrow rather than safely inside the brackets.

Any other responses gratefully received!

TravelBugHappy

I have a similar query too and have recs differenter advice from family members etc

I'm with you though - it seems very silly that they don't count it at all - you can choose to spend your salary however you want so what is the difference - why can't he pursue his boss to just up his salary & cancel the fund - does it attract some tax benefits? If it does then it may not be as clear cut as you've explained - as we all would do it? Xxx

Otherwise it is very strange they wouldn't accept it - that is my completely uneducated opinion - so wish banks would publish their criteria

amnblog

You have your view, but it is the lenders view that counts.

Trust your broker, if they have seen the pay slips and made enquiries, no broker can do more.

ACG

If they would takethe advantage fund as a bonus and its guaranteed then surely worse case scenario is half of it can be used?

I would say trust your broker, I have never had anything like this but if you have any doubts about the broker doing their job try another.

Personally I would hate for a client to say with me if they were not 100% I had done all I could.

GMS

I had a case similar recently where the client was paid an additional package which he could exchange for medical cover, life cover, additional pension contributions, extra holidays etc or take as cash.

There were lenders who would accept it as income subject to there being no tie to any package they had chosen, i.e he could stop making the contributions at any time.