SEISS/Mortgage application

tiburon

I’m doubting whether I should apply for the SEISS grant as my wife and I are hoping to buy our first home in the coming months and will be applying for mortgages. My doubt is whether accessing the grant will affect the mortgage application process and could potentially scare off lenders. My business has lost some money in these times but the change has not been so drastic that we need the grant to survive. If anyone has any idea whether it might have an impact on applying for mortgages I’d be grateful. The guidance on what constitutes a business being affected by COVID-19 was pretty vague in terms of qualifying for the grant and I was unsure whether to apply in the first place but the mortgage issue has really got me doubting it.  

justwhat

Claim for it ....... your mortgage will be based on affordability.  SEISS by itself will not be held against you. We are in same boat as you . I also got the grant for business property. 
Banks are going to be cautious anyway after this.  Good LTV may be the new consideration.  Keep the SEISS as a down payment on mortgage?

justwhat

Our worry is the bounce back loan. Ill hold off on that until we get our mortgage.

Grumpy_chap

I can't see how having extra money that you don't have to repay can go against a mortgage application.

Jeremy535897

When you come to get your SA302 to prove your self employment income, the figure will be increased by the grant, so claiming should actually be helpful.

tiburon

In case it is useful to anyone else, I contacted a mortgage adviser who has recommended that I don’t take the grant. He says lenders could be concerned about my income security if I do and could reduce my income to 80% to calculate affordability. 

Grumpy_chap

tiburon said:

In case it is useful to anyone else, I contacted a mortgage adviser who has recommended that I don’t take the grant. He says lenders could be concerned about my income security if I do and could reduce my income to 80% to calculate affordability. 

This seems wrong to me and possibly the mortgage broker has not understood the SEISS grant or confused it with furlough (where it can mean reduction in salary to 80% temporary).

SEISS is a grant calculated on 80% of profits based on historical earnings and capped at £7,500.  If claimed the SEISS is recorded in your self-employment accounts and may end up being profits by the end of the tax year

If you make a claim, your profits will be higher by whatever amount the SEISS grant is for than without the SEISS grant.  There is absolutely no reason not to claim the grant if you are eligible, nor any way that having more money (either profits or capital) can make you less suitable for a mortgage.

What may happen, in the longer term, is if your self-employed profits for 2020-21 are lower than previous years, that may affect future mortgage-ability.  It will still be better with your SEISS grant than without it.

If you are applying for a mortgage right now, that will use your SA302 and the latest possible record that is available is 2019-20 tax year, which will not show significant impact from coronavirus (though there could be some if you were hit hard and early in Feb - Mar).  Even though a mortgage application right now will use your SA302, a mortgage lender might look at your business more criticality and ask about coronavirus impacts and future ability to recover past turnover.  That is prudent on their part.  I suspect any mortgage lender doing that type of assessment would expect you to have claimed SEISS if available as to not do so would be negligent from the point of view of protecting your business.

justwhat

tiburon said:

In case it is useful to anyone else, I contacted a mortgage adviser who has recommended that I don’t take the grant. He says lenders could be concerned about my income security if I do and could reduce my income to 80% to calculate affordability. 

Maybe time to get Get a new mortgage adviser ? lol 

tiburon

Grumpy_chap said:

tiburon said:

In case it is useful to anyone else, I contacted a mortgage adviser who has recommended that I don’t take the grant. He says lenders could be concerned about my income security if I do and could reduce my income to 80% to calculate affordability. 

This seems wrong to me and possibly the mortgage broker has not understood the SEISS grant or confused it with furlough (where it can mean reduction in salary to 80% temporary).

SEISS is a grant calculated on 80% of profits based on historical earnings and capped at £7,500.  If claimed the SEISS is recorded in your self-employment accounts and may end up being profits by the end of the tax year

If you make a claim, your profits will be higher by whatever amount the SEISS grant is for than without the SEISS grant.  There is absolutely no reason not to claim the grant if you are eligible, nor any way that having more money (either profits or capital) can make you less suitable for a mortgage.

What may happen, in the longer term, is if your self-employed profits for 2020-21 are lower than previous years, that may affect future mortgage-ability.  It will still be better with your SEISS grant than without it.

If you are applying for a mortgage right now, that will use your SA302 and the latest possible record that is available is 2019-20 tax year, which will not show significant impact from coronavirus (though there could be some if you were hit hard and early in Feb - Mar).  Even though a mortgage application right now will use your SA302, a mortgage lender might look at your business more criticality and ask about coronavirus impacts and future ability to recover past turnover.  That is prudent on their part.  I suspect any mortgage lender doing that type of assessment would expect you to have claimed SEISS if available as to not do so would be negligent from the point of view of protecting your business.

Thanks for this. That is certainly interesting.

tedpark27

Hi All, I can confirm that a lot of (most?) lenders are using the SEISS grant against a borrowers affordability. Some, including Barclays and Santander are subtracting the amount received from your last two years average. So if your two year average is £30,000 and you received £5000 they will only take your average as £25,000 which would mean they are willing to lend far less.  Which seems criminal but it happened to us. Tried to contact the MSE team about it but no luck yet. Anyone know how we can raise this issue??

Sibbers123

tedpark27 said:

Hi All, I can confirm that a lot of (most?) lenders are using the SEISS grant against a borrowers affordability. Some, including Barclays and Santander are subtracting the amount received from your last two years average. So if your two year average is £30,000 and you received £5000 they will only take your average as £25,000 which would mean they are willing to lend far less.  Which seems criminal but it happened to us. Tried to contact the MSE team about it but no luck yet. Anyone know how we can raise this issue??

There is nothing criminal about it. Banks are being prudent with their investors money.

the only thing you can do is apply to a different lender.