Applying for Financial products with no income, but of "independent means"

Sea_Shell

Yes we are (were) both PAYE. Both will be non-taxpayers next year. Wouldn't want to risk declaring something that is basically a lie. But it would've been nice to have that extra 0% balance to stooze against. Don't 'need' it.

Caladan

I can only speak from personal experience but banks like income to be income (i.e. earned salary/self employed pay or from pension. Quite often savings/investment income isn't allowed although automated credit scoring wont know the difference, it's only if it gets looked into by a human that it can be a problem).

The fact neither of you will be tax payers shortly suggests your incomes will be very low, and if assessed manually instead of electronically may cause you issues...

Sea_Shell

That was why i posted my initial question....as it appears the Banks only want take into account SALARY/INCOME, not how much you may have in savings/investments etc. or what your personal circumstances are.

Surely it's how you manage your money that should be the issue, not how much you earn. Someone on £50k who blows £51k a year, against someone who earns £11k and spends £10k.

I'd be all for a manual assessment from a human being....as maybe they'd take the above into account.

I understand that we are in quite an unusual situation, being able to do what we do, and we don't fit this "tick box" age.

Caladan

Sea_Shell wrote: »

That was why i posted my initial question....as it appears the Banks only want take into account SALARY/INCOME, not how much you may have in savings/investments etc. or what your personal circumstances are.

Surely it's how you manage your money that should be the issue, not how much you earn. Someone on £50k who blows £51k a year, against someone who earns £11k and spends £10k.

I'd be all for a manual assessment from a human being....as maybe they'd take the above into account.

I understand that we are in quite an unusual situation, being able to do what we do, and we don't fit this "tick box" age.

I understand where you're coming from, but there are valid reasons only certain types of income are acceptable (I'm speaking primarily of lending by the way, bank accounts I don't intend to comment on other than the below paragraph).

For accounts requiring a minimum turnover to qualify (1k/month or whatever it happens to be) then you should be fine I would think, depending on the bank, as long as you will meet that turnover in some way (not internal transfers between your own accounts).

For credit cards/lending, it's a different situation - I'll try and give an example as to why but please forgive me if it's not written well, I'm rather tired. Also - The example I give is only part of the story, but an important one.

***Please note all figures etc are random numbers I've come up with and are not designed to fit your own situation perfectly***

Your savings mean very little in credit decisions (with some exceptions).
Scenario: You have £200k saved up sitting with your bank. You want to borrow £10k on a credit card but your only 'guaranteed' income is your state pension of £650 a month or £8450 a year. You also have investments which produce dividends of £10k a year, making your total annual income £18k.

Your point of view:
You have all this money in the bank so you're not a risk in the slightest - An understandable conclusion.

From the lenders point of view:
You don't have a guaranteed income high enough to support borrowing of £10k. It's more than a years worth of your guaranteed annual earnings which is very high debt to income.

If your investments fail to produce the returns they've made in the past, it could put you in financial difficulty trying to maintain the repayments for the credit.

Now, you could argue you also have the £200k in cash with the bank so there's still no risk of not repaying the balance. The issue is - what if something unforeseen occurs? What if there is a tragedy in the family/your house falls down/the Soviets invade Jersey and you understandably want to help, it might cost you that £200k. All of a sudden you're stuck with a debt you can't afford.

A further risk is if you then complain to the bank, saying they should never have lent you unsecured credit higher than your actual annual income. The bank doesn't have a leg to stand on as it could be construed as 'irresponsible lending.'

There's also a reputational risk to the bank - If they've lent you this money and demand it back because the above occurs, you as a consumer are likely to tell the story to other people/local media etc. and regardless of the facts the bank will be the one that suffers.

I know the above is unlikely, but it happens (not the Soviet invasion...yet).

P.s. I am not at all saying you would do any of these things, I just want to paint a picture of the issues.

Kind regards and I hope you can benefit from as many offers as possible!

Cal

boo_star

I think the larger issue is that people could just withdraw all their savings, leaving the bank high and dry.

Sea_Shell

Thanks Cal I do understand all that, but a good income should not automatically make you a good risk.

I doubt that these days anyone's income is GUARANTEED. We can all lose our jobs.

I would suggest that it's just as likely (or maybe even more-so) that the Executive with the high-flying, high-paid job, Mercedes on the never-never, £200k Mortgage with no savings will be made redundant and be the one to end up up-the-creek.

If the **** did hit the fan to my lifestyle, i know that paying off ANY debt would be the first thing i'd do. We're only talking about a couple of grand at the end of the day.

Like most of us on here....just wanting our money to work as hard for us as it can.