Acceptable types of income for mortgage application

GreatApe82

HI All,


I am currently trying to re-mortgage using mine and my sisters income to apply. However, my sisters circumstances have changed. She left work in 2016 due to mental health, but has lived off an income protection plan (provided by her last employer) that will continue to pay 75% of her wages (still £800 p/m more than me) until she is in a similar job and salary level. Even if she goes into full time work, if the new job does not pay as much as her income protection policy, the policy will pay the difference. The policy only ceases when she is in work and on equal salary or she reaches age 65.


Pretty good policy, right??


Except, our current lender will not accept my sisters income protection plan as an income and as such, could only use my meagre income to calculate what they could lend.


Other than my sisters circumstance, I feel we are in a good position. My sister and I are only 38 and 36 respectively, we have no previous missed payments, and have an LTV of 36.98%.


Please could someone advise if they know any lenders that would accept my sisters Income Protection as an income?


Many thanks in advance

csgohan4

Get a broker to try and see a lender can take you on, otherwise you can get retention products online from your online account which requires no credit checks or affordability assessments

kingstreet

You talk about a remortgage, then about your existing lender. What exactly are you trying to do?

GreatApe82

We are remortgaging and also adding me to the mortgage (I have been on the deeds since we bought the house in 2006).


So our current deal ends on 1st December with our current lender and the interest will revert to their SVR (4.49%; thus we are looking for a new fixed rate mortgage, potentially with another lender (Since our current lender has now advised that they will accept my sisters income but offered, what I feel is not the best rate we can get: 2.49%), who will accept my sisters income from her Income Protection Policy.

muhandis

A mainstream lender like Nationwide treats income protection income as employed income -

From their website - "Income Protection Insurance - Treat as employed income -
Latest payslip/letter confirming the monthly income"

So I would assume there would be plenty of lenders who do the same. However, unless you want to personally go through a potentially painful trial and error method to arrive at the best lender/rate, the sensible thing to do would be to speak to a broker.

Good luck!

GreatApe82 wrote: »

We are remortgaging and also adding me to the mortgage (I have been on the deeds since we bought the house in 2006).

So our current deal ends on 1st December with our current lender and the interest will revert to their SVR (4.49%; thus we are looking for a new fixed rate mortgage, potentially with another lender (Since our current lender has now advised that they will accept my sisters income but offered, what I feel is not the best rate we can get: 2.49%), who will accept my sisters income from her Income Protection Policy.

MortgageMamma

There are lenders who could look at this, and I understand you wanting to get a slightly better rate. But 2.49% isn't such a bad rate in my opinion.

If you wanted to pursue looking for a remortgage then enlist the help of a reputable broker. There are far more lenders in the market than you will realise and there will be a suitable one for you.

There is nothing stopping you attempting this yourself of course, and if you chose to do so the best thing to do would be to phone or live chat your chosen lenders and discuss this income situation before committing to having your details entered into the lenders system.

GreatApe82

Thanks for all your advice.


As it happens, I did get a broker to look at the options and the best one for us came from Nationwide with a rate of 2.14% fixed over 5 years.