Shall we pay for the references or not bother? help

CharleyAaron

So I will try and keep this short, we are currently in rented and have been hear for coming up for 4 years. We have since married, had a baby, and plan to extend our family this year.

Our current house has served us well at £950 pcm.
We now would like to move, to get another bedroom and away from a very busy main road outside.

Our current property is “cheap” for the area and size - and they have only ever put out rent up one by £55.

We have never ever defaulted on our rent and we are the “perfect” tenants - so our reference from them will be 100%

The properties we have found are a huge jump up in price, we have just found and viewed one at £1,375.

I never returned to work, so now we are trying to just rely on my husbands earning to prove we can afford to move.

He is self employed which doesn’t help, and earns £28,000 gross per year, however to “afford” the £1,375 he would need to earn £41,250 per annum by himself now I’m not working.

However my mum is happy to be our guarantor, turns out she has to earn 36 times, thankfully she does gross.

However I worried about if this will all go through ok, a guarantor isn’t to fall back on each month, so how does it work with regards to a guarantor surely my husband is still to far away from what he can prove he earns and what he “needs” to for affordability, £13,500 short going by there 30x the rent.

Will we be wasting £500 to get rejected?

The letting agency are aware of the suituation and earnings, surely he has be within a small percentage away from 30X.

We don’t have the most brilliant credit rating either, I’m poor and my husband is fair. No CCJs or anything like that.

Help....

Thank you in advance....

bowlhead99

CharleyAaron wrote: »

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He is self employed which doesn’t help, and earns £28,000 gross per year, however to “afford” the £1,375 he would need to earn £41,250 per annum by himself now I’m not working.

Yes, if that's what the prospective landlord wants him to be earning, to give the landlord comfort that you'll be able to keep up the rent payments and not leave the landlord chasing for it all the time.

The fact that you paid previous rent on time and have a reference to prove it, only goes part way to give the landlord that comfort, because the new place is 45% more expensive than your old one (as a result of larger house, nicer area, no main road outside, new place won't be a special "cheap" deal compared to others at market rate).

Not all landlords demand income proofs, you may find some who would take a lower multiple. The ones who are the most respectable and trying to be 'the good guys' in making sure you can really afford it before signing you up to a tenancy they might end up having to evict you from, are more likely to want a high multiple, with proof. £1375 pm (or £16500 a year) in rent when you are self employed and only earn less than double that amount - before tax - would be a concern to some LLs.

However my mum is happy to be our guarantor, turns out she has to earn 36 times, thankfully she does gross.

That's more comforting for the landlord because if she is promising to be on the hook for all your rent if you can't/ won't pay it, and all your rent is only a third of her income (annual income of 36x monthly rent) they will be less reluctant to take you on as tenants.

Basically if you don't pay on time they can go after her for it and she earns around £50k or more so they will probably see her as a someone respectable and a fervent risk who won't try to ruin away from her obligations if you and hubby do.

However I worried about if this will all go through ok, a guarantor isn’t to fall back on each month, so how does it work with regards to a guarantor surely my husband is still to far away from what he can prove he earns and what he “needs” to for affordability, £13,500 short going by there 30x the rent.

He doesn't need to prove he definitely has the income if your mum is willing to say, "don't worry about *his* income, *I* earn considerably more than your threshold and am willing to let you come after all my income and assets if you have a problem with the rent or damages etc.".

Basically, you reckon you can afford £1375 without being overstretched, and someone (your mum) is willing to put up her hand and say that she believes you, so much so that she will guarantee the landlord will get paid if there's ever a problem for the duration of the tenancy - she will cover any and all shortfalls.

So the landlord has the comfort that the tenant expects to be able to pay it and if the tenant is wrong in his expectation there is another wealthier party standing by to cover the whole lot.

As such, if she passes their test, they will be ok

Will we be wasting £500 to get rejected?

If you don't have the earnings yourself and you don't think your mother has the earnings or repute to act as guarantor so that they look past your husband to the mum, there is no point applying. If you do think your mum's income is ok, then apply, if you really want this place and can genuinely afford it and don't expect to be needing up your mum's finances when they chase her for your debts.

There is no obvious reason to reject you if you meet their criteria by any one of the methods. So that could be your own income alone, or someone else's

We don’t have the most brilliant credit rating either, I’m poor and my husband is fair. No CCJs or anything like that.

A prospective landlord or their agent can't see your full credit file or a 'score' because you are not applying for credit with them. The credit reference schedule is really just for ID and to find out about other 'serious' issues you have, like CCJs. As you don't have CCJs and are presumably not bankrupt, not a big deal.

Help....

Thank you in advance....

Well, the most obvious advice is that if you have poor credit and you don't have an income yourself and you don't have enough money coming in to be totally comfortable with being able to afford the financial commitment of over half your husband's gross income being spent on rent - and you don't want to raise another child without moving to a bigger place, further away from main roads - then you shouldn't plan to add to your family right now and lumber yourself with extra costs of raising another child on top of the affordability problems you have.

Maybe you feel your husband can easily afford the rent even though he doesn't have the income to pass their tests. Maybe his self employed status helps him have more take-home pay after tax than the average worker with that gross income. So you might feel that their salary multiples test is a little unfair and affordability will not, in practice, be a problem. However, the fact you have poor credit score and husband's is not great either, perhaps implies your financial judgement has been wrong before.

If you do want to plan for another child regardless of financial health, you shouldn't make it harder on yourself by getting a bigger and more expensive place. "Make do" would be the 'moneysaving expert' thing to do, rather than take on a 45% rent rise with no new income sources and some known new (baby) expenses.

G_M

Every landlord (and/or their agent) has their own criteria.

But in general, if there is a guarantor in place then the tenants' income becomes far less relevant (if at all). the LL just wants to know that there is someone with a decent income who will pay the rent, or who can be taken to court if they don't.

CharleyAaron

Thank you for your input, the issue we are finding no one seems to know if they go on your gross figure as self employed or your net, my mum wouldn’t have enough to cover 36 times if it’s net but if it’s gross she more than covers it.

PersianCatLady

CharleyAaron wrote: »

Thank you for your input, the issue we are finding no one seems to know if they go on your gross figure as self employed or your net, my mum wouldn’t have enough to cover 36 times if it’s net but if it’s gross she more than covers it.

No-one other than the LL can answer that question with any certainty.