Mortgage Affordability with RSUs

Fletchasketch

Hello,

Have also posed this question to a broker, but wondered if any fellow techies had applied for a mortgage and been able to include their RSUs (shares) as part of their mortgage Affordability. I have about £16000 worth which vest over the next three years, as well as £3000 which vested this year and were paid in cash. Are any lenders likely to consider some or all of none of these when calculating what they're prepared to lend?

Thanks!

ACG

I cant see that happening. They are not generating income forever more like your job is. Lets assume you receive £5k this year and for the next 5 years. Then what...? It stops. Unless your mortgage is a 5 year term they would be not only be using unsustainable income but something they know will stop.

I am not sure of the full details of these share options, but could they also be worthless tomorrow? When I worked for RBS we had som bloke round telling us how we should be doing the share save scheme... 3-4 years later I think we all know what happened to their shares.

Fletchasketch

Sure, and I guess that's the reason for my question. You could argue that with any income it's not guaranteed for the term of the mortgage. I could not be awarded an annual bonus next year or I might get sacked tomorrow- the mortgage company have to base their affordability on something!

From a quick google, I can see that RSU's are taken into consideration for home loan affordability purposes in the US where I think they are much more common, so even if the UK market hasn't caught up, it's not a stupid question!

kingstreet

We have recently had an Amazon employee's share bonuses taken into account for mortgage affordability.

We provided three years' P60s which demonstrated the value of the shares had been taxed and included in the applicant's income, even though it hadn't been paid in cash.

Fletchasketch

kingstreet wrote: »

We have recently had an Amazon employee's share bonuses taken into account for mortgage affordability.

We provided three years' P60s which demonstrated the value of the shares had been taxed and included in the applicant's income, even though it hadn't been paid in cash.

This is really helpful- thank you. I only have one year's which won't appear on my P60 until next year. It is on my April payslip though. Would I be right in thinking I'll need evidence of this over two years?

Yellow_mango

It feels like this should be treated similarly to a bonus, if it’s a regular annual award / vesting.

TSB were willing to take my last year’s (cash) bonus into account based on a single payslip showing it being paid. Apparently other lenders require more than one year, so might be worth speaking to a broker on that.

ACG

I never said it was a stupid question. I just thought I would expand on the answer and give my reasoning behind it.

No income is guaranteed, but the difference is one has a definitive end date, the other there is no reason to suggest it will not carry on for the foreseeable.

If you are saying it is something which is likely to carry on forever more, then it may be possible to use them, although had kingstreet not replied I would still be leaning more towards it being unlikely... Every day is a school day in this industry.

Fletchasketch

ACG wrote: »

Every day is a school day in this industry.

Isn't it though! It seems there's very little information about regarding RSU's, so I do appreciate the responses. Have put the question to my broker, so I'll update as soon as I hear back. Thanks again!

ACG

Thats the best thing to do. They can check with their account managers.

Fletchasketch

So the broker has responded by saying lenders won't accept 'investment' income, it sounds like he means dividends which RSUs are not. Ah well, at least I know now.

moremailinmyinbox

Hello,

Thank you for sharing!
Can you share which bank was used when considering your client's Amazon RSUs?
Helpful info.

Thank you