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Mortgage application: temporary tax code adjustment
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24102017
Posts: 12 Forumite

Good afternoon,
I have a couple of quick queries in connection with applying for a mortgage for a first purchase.
1. Tax-free allowance. I temporarily (up to the end of the tax year) have no tax-free allowance, to true-up my income tax position for this tax year. It will resolve by March 2020 and has had the effect of reducing my net income by £300/month for the six months until then. Obviously this doesn't affect the overall expected income streams for the next 20-30 years, but it will appear on bank statements I provide for a mortgage as my recent net income. Can I explain this with a copy of the HMRC statement? I can support my actual long-term net income with the payslips (which show the gross pay) and contract, etc.
2. Expenditure. I spend a lot on discretionary items, on credit cards that I've always paid off in their entirety each month (I've never paid any credit card interest over ten years with an average monthly spend of £1.5-£2k). I've never spent more than I've earned and all the spending is not committed. Examples include 1-2 holidays (such as weekends to Europe) each month. I will cut down my spending to be commensurate with a mortgage, as my spending has simply matched my disposal income to date. My credit history supports this view. My query is: can this spending behaviour hinder a mortgage application? I can reduce this right now, but it will take a few months to become noticable.
Context: £100k deposit, working in a profession in a stable job, history of accumulated saving over 10 years (albeit sporadic and with a long-standing history of high consumption expenditure).
Thank you very much in advance!
I have a couple of quick queries in connection with applying for a mortgage for a first purchase.
1. Tax-free allowance. I temporarily (up to the end of the tax year) have no tax-free allowance, to true-up my income tax position for this tax year. It will resolve by March 2020 and has had the effect of reducing my net income by £300/month for the six months until then. Obviously this doesn't affect the overall expected income streams for the next 20-30 years, but it will appear on bank statements I provide for a mortgage as my recent net income. Can I explain this with a copy of the HMRC statement? I can support my actual long-term net income with the payslips (which show the gross pay) and contract, etc.
2. Expenditure. I spend a lot on discretionary items, on credit cards that I've always paid off in their entirety each month (I've never paid any credit card interest over ten years with an average monthly spend of £1.5-£2k). I've never spent more than I've earned and all the spending is not committed. Examples include 1-2 holidays (such as weekends to Europe) each month. I will cut down my spending to be commensurate with a mortgage, as my spending has simply matched my disposal income to date. My credit history supports this view. My query is: can this spending behaviour hinder a mortgage application? I can reduce this right now, but it will take a few months to become noticable.
Context: £100k deposit, working in a profession in a stable job, history of accumulated saving over 10 years (albeit sporadic and with a long-standing history of high consumption expenditure).
Thank you very much in advance!
0
Comments
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2. Based on what you have said, your spending patterns will not stop you from getting a mortgage at mainstream rates.
1. Most lenders will consider your gross income for affordability purposes, so it *should not* be a problem. But what's the reason for the 0 tax allowance code?
On the face of it, I don't see any obvious issues, I would recommend that you speak to a broker who can look at the entire picture and tell you how much you can realistically borrow.0 -
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