Strange scenario with evidencing tax credits

Icequeen99

roje wrote: »

Yes you have, thanks for that.

Current income being used for tax credit purposes: £18,745 (I only work 3 days until Sept).
Actual income from Sept 1st: £30,200.
Mortgage based on £30,200 plus the amount of tax credits the online calculator says I will receive for an income of £30, 200 ( I have used the calculator incorrectly on purpose to cancel out any confusion, rather than putting my 'real' income for this tax year as I wanted to find out how much I'd receive on my salary only from April 2017).

What is troubling me is that my revised award for this tax year will actually show an income of £25,425 (I know that £5k of this is disregarded so I will receive more until April than I normally will in future). I'm worried that having this new 'earnings' figure on the award notice is just going to confuse the lender further.

My only other option is to ring tax credits again and (incorrectly) report my income for this tax year as £30,200 so that my new income shows on my award notice (simply for the sake of the mortgage). However, I will lose money, and even worse, they could decide that I might go over the threshold for tax credits if I'll be earning that much more in 7 months?

No idea what to do. There are delays involved here too, it takes two weeks each time for a revised award.

Which online calculator did you use?

The only way to get an award this year to be based on income of £30,200 is to estimate an income of £35,200. You would have to manage on lower tax credits until the point you come to finalise when any underpayment based on the 25k would be given to you. I am not sure I would advise trying to do that.

I am surprised the bank are willing to take an award based on estimated income when in fact you can just give any figure and have your award adjusted. That said, i know about tax credits but not mortgages.

So your current award is based on £18,745, your actual income for this year will be £25,425 in which case HMRC will use 20,745 to calculate the award for 15/16 because your income has risen by more than 5k.

From April 16, they will based your award on 25,425 and will finalise on that amount.

From April 17, they will base it on 30,200.

IQ

roje

Icequeen99 wrote: »

I am surprised the bank are willing to take an award based on estimated income when in fact you can just give any figure and have your award adjusted. That said, i know about tax credits but not mortgages.

Me too!

I used the HMRC calculator, it estimates what you are owed from today until April 5th 2016 based on your earnings for 2014-15, I put in a salary of £30,200 to see what my award would be from that worked out what the annual amount would be (obviously I'll receive more than this figure until 2017).

I'm hoping they will just accept my revised award as it will show what my payments will be until April. There must be other people in my position, but I can't find anything online about it.

I can prove what I'm getting until April. That's 10 months away. ANYONE who applies for a mortgage can find their circumstances alter in 10 mths. Redundancies, changes in job, new babies, income decreases etc. I'll still be earning the same salary in a stable public sector job (I'm a teacher) and I'm asking to borrow 3.65 times my income (salary only) with a LTV of 44%. Sound credit history, no debt. I don't see myself as much of a risk but then I'm not an underwriter. They must think I need the tax credits to pass affordability.

Icequeen99

roje wrote: »

Me too!

I used the HMRC calculator, it estimates what you are owed from today until April 5th 2016 based on your earnings for 2014-15, I put in a salary of £30,200 to see what my award would be from that worked out what the annual amount would be (obviously I'll receive more than this figure until 2017).

I'm hoping they will just accept my revised award as it will show what my payments will be until April. There must be other people in my position, but I can't find anything online about it.

I can prove what I'm getting until April. That's 10 months away. ANYONE who applies for a mortgage can find their circumstances alter in 10 mths. Redundancies, changes in job, new babies, income decreases etc. I'll still be earning the same salary in a stable public sector job (I'm a teacher) and I'm asking to borrow 3.65 times my income (salary only) with a LTV of 44%. Sound credit history, no debt. I don't see myself as much of a risk but then I'm not an underwriter. They must think I need the tax credits to pass affordability.

Good luck with it.

Of course, there may be changes to tax credits come July 8th.

Hopefully the mortgage will go through smoothly for you.

IQ

Let_Us_See

I am surprised your broker allowed an application utilising future salary and not surprised rejected by lender.

What is your broker doing to assist finding a potential new lender?

roje

Let_Us_See wrote: »

I am surprised your broker allowed an application utilising future salary and not surprised rejected by lender.

What is your broker doing to assist finding a potential new lender?

It hasn't been rejected by the lender. They just want evidence of the tax credits. I am relocating, hence using future salary (new job is 200 miles away).