Investment income and affordability

Legacy_user

Hello everyone

I've seen that affordability calculators do factor in dividend income, but does this need to be from income funds, where its obvious, or can it be from more opaque accumulation funds? I have accumulation funds because they do better but its difficult to really find out what the reinvested dividend was and I suppose I'd have to ask them for a statement but its one that's "managed online" so its difficult to speak to a human, I'm just trying to get general info from trustnet at the moment but I'm not sure that'd be acceptable as its not a statement?

Anyway, actually switching to an income fund could have a higher holding cost, as well as the cost of being out of the market while prices rise and I'm waiting for the fund manager to get off Facebook and process the transaction. I'd sooner put off remortgaging than sell up to overpay

Anyway its also surprised me that I seem to be able to borrow about 1/3 more than last year, with no income improvement, base rate is down, maybe having a child isn't so much of a downer anymore in their eyes?

Also I pray that some lenders disregard excessive voluntary pension contributions (paid from net)...

ACG

I do not know many/any lenders off the top of my head that would accept investment income as a form of income. I always remember when I worked for a bank and a customer saying he has £50k worth of shares in "us". Management basically bent over backwards as we assumed "our" shares were invincible. 9 months later and the government were bailing us out and the shares were worth about £5k.

Lenders do accept dividend income but that is usually where the applicant is self employed and owns around 20% of the company or more. It is a bit of a tax loophole in that you pay yourself around £10k in wages and anything over and above as a dividend to pay less tax. Dividends as your sole income from companies you do not own could be very different.

dunstonh

I've seen that affordability calculators do factor in dividend income, but does this need to be from income funds, where its obvious, or can it be from more opaque accumulation funds?

That is really aimed at directors of companies who get paid in dividends.

I have accumulation funds because they do better

No they dont. They do exactly the same as income units.

but its difficult to really find out what the reinvested dividend was and I suppose I'd have to ask them for a statement but its one that's "managed online" so its difficult to speak to a human, I'm just trying to get general info from trustnet at the moment but I'm not sure that'd be acceptable as its not a statement?

Its not something you declare as income in the affordability.

Anyway, actually switching to an income fund could have a higher holding cost, as well as the cost of being out of the market while prices rise and I'm waiting for the fund manager to get off Facebook and process the transaction. I'd sooner put off remortgaging than sell up to overpay

If you are using a platform (which your investment sections posts suggest) then it will be the platform that handles the conversion. Not the fund manager. Although they do correspond with each other in the process behind the scenes.

System

I accept its aimed at directors/self employed, but its all a bit tight and anything I can do helps

No they dont. They do exactly the same as income units.

Free immediate reinvestment, I know on paper they look the same

And thank you, will talk to platform

Thrugelmir

MatthewAinsworth wrote: »

Free immediate reinvestment,

What if you don't want to reinvest into the same fund?

System

Thrug - good point, esp from a rebalancing perspective