Bank statements and PayPal deposits - First time buyer

aiwnjoo1

Hello, I am currently applying for a property and has been agreed in principal. I have received the documents checklist that my mortgage adviser needs in order to draft/underwrite to the lender for approval.

I have been asked to provide three months bank statements which is fine. The bank statements show my employment income each month and all direct debts / standing order, it fits in with the figures given for the provisional acceptance and the lender agreed in principal.

We are putting down a 5% deposit which is part savings of my own and part from family.

I do some freelance programming where I receive odd bits of income similar to how it would work with eBay and there are some deposits (3-5 per month on each statement less than £300 in value each) and this comes in via PayPal which I would then deposit to my own account.

I earn no where near enough to warrant it being a business and requiring to pay tax however I am a bit worried that the lender will ask for evidence of this and not really sure how I can explain it.

The mortgage has been applied for and agreed in principal so far on mine and my partners income from our employment only so its not reliant on the extra income I receive.

I decided to do some freelance work to help save up, now im thinking I will be scrutinised for this.

Thankyou.

AnotherJoe

aiwnjoo1 wrote: »

Hello, I am currently applying for a property and has been agreed in principal. I have received the documents checklist that my mortgage adviser needs in order to draft/underwrite to the lender for approval.

I have been asked to provide three months bank statements which is fine. The bank statements show my employment income each month and all direct debts / standing order, it fits in with the figures given for the provisional acceptance and the lender agreed in principal.

We are putting down a 5% deposit which is part savings of my own and part from family.

I do some freelance programming where I receive odd bits of income similar to how it would work with eBay and there are some deposits (3-5 per month on each statement less than £300 in value each) and this comes in via PayPal which I would then deposit to my own account.

I earn no where near enough to warrant it being a business and requiring to pay tax however I am a bit worried that the lender will ask for evidence of this and not really sure how I can explain it.

The mortgage has been applied for and agreed in principal so far on mine and my partners income from our employment only so its not reliant on the extra income I receive.

I decided to do some freelance work to help save up, now im thinking I will be scrutinised for this.

Thankyou.

How on earth did you get a mortgage if you dont earn enough to pay tax???

Anyway, all this amounts to is that you have some money coming IN, on which you arent relying or even claiming for your affordability, so why would the lender care? Maybe you've been selling your furniture, or rare collection of past editions of Bunty magazine, or coding for the Russians to dig up dirt on Trump, doesn't really matter.

I suspect the tax man may be coming to see you soon though.

aiwnjoo1

No, I pay tax on my employment but a small amount here and there via PayPal is what I meant, this doesn't come close to the amount needed to be tax for (Self employment).

I will read into it though, thanks for the advice aswell its eased me somewhat.

davidmcn

aiwnjoo1 wrote: »

No, I pay tax on my employment

So you've already used up your personal allowance...

aiwnjoo1

Im confused what you mean.

Lets say last month I deposited £400 from PayPal into my bank account, consisting of three deposits over the month.

This is what im concerned with, my mortgage application is based purely on my income from my employment (Which I get taxed on) so I am just trying to figure out if a few odd deposits from PayPal will cause issues. Say if I sold a few bits on eBay.

Thankyou.

Fuzion

You should be paying SA tax by the sound of it so you should register with HMRC. Even if it's just a 'bit on the side'. Hopefully you didn't start before last April! I doubt the lender would query it as they'll be looking mainly at your salary income but you can tell them you've only started doing this recently and intend to submit a tax return when it's due. I can't see how it would count against you in any way. They just won't count it as 'earnings' if you haven't got any past tax returns.

davidmcn

davidmcn wrote: »

So you've already used up your personal allowance...

aiwnjoo1 wrote: »

Im confused what you mean.

There isn't an "amount needed to be tax for self-employment" - there's one personal allowance for Income Tax, and you've already used it up with your income as an employee. Any more money you make from your self-employment (or rather, the portion of it which is profit) is going to be liable to tax.

Thrugelmir

aiwnjoo1 wrote: »

Say if I sold a few bits on eBay.

But it's not. You've effectively said as much. Are you invoicing your clients via Paypal?

csgohan4

Do brokers have to report tax avoidance?

AnotherJoe

The broker won't be aware if the OP is paying tax or not.

OP you don't get one tax allowance for each job, or one for self employed and one for being an employee ! You get "a" tax allowance.

If you are on a 20% tax rate you should be paying 20% tax on your earnings, however trivial they are, though you could offset earnings against expenses.

HMRC is even going after people who trade a lot on eBay arguing that it's a business

But this is nothing to do with your mortgage application. They care about income and outgoings, but they only care about income you are relying on. If you haven't asked them to take this into account, why would they care,as you say you could have sold some stuff on eBay. It's the tax man you should be worried about

aiwnjoo1

ok im worrying a bit more now.

1. My partner has an overdraft of 1,000 will this be a problem? her income is around £900 per month but i am in the position with savings to clear this for her if the lenders require. Technically her income is less than what she owes on the student overdraft so im wondering if they will discount her income as its a joint application, I pay all bills however.

2: There are some deposits from savings and paypal which they are saying is sustaining my day to day living which is wrong, my affordability from my income plus bills shows that we have about £1300 a month disposable income. Because we are buying things for the new home and saving, my monthly bank statement is around 0 so thats why they think that, will this be an issue?

3: I have been asked for my savings statements which is fine however all deposits into savings is from PayPal will they then go digging into that?

Will getting a parent to commit to paying the mortgage if it falls behind help, even though this will never happen and we could pay the mortgage payments three times over my statements don't really show that. Will this help or am i over worrying.

The PayPal deposits are not in the thousands, 50/100,200 here and there over three months, same into the savings account.

Im just really worried about all this. Ihave contacted HMRC and awaiting a callback to discuss further so thats in the pipeline which is good.