Flexible Benefit Allowance - Be Careful!

Cirias

I had some great news from my broker this morning - I've been approved for a mortgage! However, it came after a very stressful few weeks which culminated in the lender reducing my mortgage offer by £13k and underwriters refusing to budge even when the BDM was spoken to. The broker even began to doubt our ability to get any mortgage at that value. It all seemed pretty dire for those weeks.

It turns out the issue was that the lender hadn't taken into account my flexible benefits allowance which I receive through work, and which funds things such as my car lease, pension contributions and other stuff. Even though the allowance is clearly visible on my pay slips, and even though I told the broker several times to notify the lender about it.

I just wanted to post this here so others who also receive such an allowance don't get incorrectly down-valued. I'd wrongly assumed that because the allowance was shown on my pay slips, that the underwriters would be able to put two and two together. But don't assume - be very specific and ensure they know that the flexible allowance is on top of your salary, otherwise they may assume that all the benefits you receive through work are coming out of your base pay.

ACG

I think this lies firmly at your brokers feet. Anything like this, I ALWAYS run by my account manager or an underwriter. I check how they will view it, how it needs to be keyed and after both of those whether it will still fit affordability.

There is no reason to not check these things as it prevents issues like you have come across.

You could blame the underwriter for not having common sense, but if it does not fit, it does not fit. Sometimes if the facility is there, I do put notes on the application to confirm the situation, but not all lenders offer that.

In either case, anything out of the ordinary should always be checked upfront before doing a DIP let alone an application.

Hopefully you get it sorted if it has not been already.

kingstreet

I agree.

A broker should never assume anything. If I don't need the income, I will deliberately ignore it.

If it won't meet affordability without it, you have to check with the lender that it's acceptable and how it should be entered.

You do the same with overtime, bonus, commission, tax credits, child benefit, maintenance etc.