Mortgage broker - ask me anything

K_S

Vp0007 said:

Hey! What documents do lenders usually ask for if I am employed by a family business? (no shareholding, just PAYE employee but the business is owned by direct family). Application is with Santander. Thanks

@Vp0007 PAYE income from family business - this is the published evidence requirement for Santander

Zarathustra01

Hi there, I imagine this is a pretty naive question but I am currently a partner at an LLP firm and this will be the first year I pay tax through self assessment. However, my salary is set (plus a variable bonus). The only reason I'm classified as a Partner is because I have significant influence over decision making. So my question is, when applying for a mortgage would I say I am self-employed even though my salary is set?

K_S

Zarathustra01 said:

Hi there, I imagine this is a pretty naive question but I am currently a partner at an LLP firm and this will be the first year I pay tax through self assessment. However, my salary is set (plus a variable bonus). The only reason I'm classified as a Partner is because I have significant influence over decision making. So my question is, when applying for a mortgage would I say I am self-employed even though my salary is set?

@zarathustra01 Are you a PAYE employee of the LLP? Is all of your income (salary+bonus) from the LLP paid through PAYE? Do you have monthly payslips that show the gross pay, tax & NI deductions, etc.?

If the answer to all of the above questions is Yes, then lenders may potentially consider you as employed for the purposes of the mortgage.

But given that you’ve said you pay taxes through SA and you’re doing your first SA, I’m guessing you aren’t paid through PAYE.

Zarathustra01

K_S said:

Zarathustra01 said:

Hi there, I imagine this is a pretty naive question but I am currently a partner at an LLP firm and this will be the first year I pay tax through self assessment. However, my salary is set (plus a variable bonus). The only reason I'm classified as a Partner is because I have significant influence over decision making. So my question is, when applying for a mortgage would I say I am self-employed even though my salary is set?

@zarathustra01 Are you a PAYE employee of the LLP? Is all of your income (salary+bonus) from the LLP paid through PAYE? Do you have monthly payslips that show the gross pay, tax & NI deductions, etc.?

If the answer to all of the above questions is Yes, then lenders may potentially consider you as employed for the purposes of the mortgage.

But given that you’ve said you pay taxes through SA and you’re doing your first SA, I’m guessing you aren’t paid through PAYE.

Hi, thanks for responding.

The answer is no to all of them, my PAYE stopped in October when I became a Partner. So it looks like I will have to apply as self employed.

What I'm trying to get at is, given my salary is set, will a broker offer me similar terms to an employed person. Or will they just say "you're self employed so we can't offer you as big a mortgage"? 

K_S

Zarathustra01 said:

K_S said:

Zarathustra01 said:

Hi there, I imagine this is a pretty naive question but I am currently a partner at an LLP firm and this will be the first year I pay tax through self assessment. However, my salary is set (plus a variable bonus). The only reason I'm classified as a Partner is because I have significant influence over decision making. So my question is, when applying for a mortgage would I say I am self-employed even though my salary is set?

@zarathustra01 Are you a PAYE employee of the LLP? Is all of your income (salary+bonus) from the LLP paid through PAYE? Do you have monthly payslips that show the gross pay, tax & NI deductions, etc.?

If the answer to all of the above questions is Yes, then lenders may potentially consider you as employed for the purposes of the mortgage.

But given that you’ve said you pay taxes through SA and you’re doing your first SA, I’m guessing you aren’t paid through PAYE.

Hi, thanks for responding.

The answer is no to all of them, my PAYE stopped in October when I became a Partner. So it looks like I will have to apply as self employed.

What I'm trying to get at is, given my salary is set, will a broker offer me similar terms to an employed person. Or will they just say "you're self employed so we can't offer you as big a mortgage"? 

@Zarathustra01

It depends on the specific lender and the specifics of your case.

Generally speaking for a partner in an LLP, for the widest spectrum of mainstream lenders, you will need 2 years of tax-returns.

A smaller subset of mainstream lenders will consider 1 full year of tax returns.

However, some lenders may be willing to consider the case without needing a full year’s tax return subject to underwriter discretion. For example like NatWest says in its criteria here

It’s a myth that self-employed people can’t borrow as much as an employed person could simply because they’re self employed. I would suggest getting a recommendation for an experienced broker from your friends/family/colleagues/LLP-partners and speaking to them. All the best!

Zarathustra01

@K_S

Ok many thanks. Really appreciate your help!

Vp0007

K_S said:

Vp0007 said:

Hey! What documents do lenders usually ask for if I am employed by a family business? (no shareholding, just PAYE employee but the business is owned by direct family). Application is with Santander. Thanks

@Vp0007 PAYE income from family business - this is the published evidence requirement for Santander

Thanks for your reply! 
My timeline is the following: 

13/03 - application submitted 

13/03 - hard check carried out 

15/03 - additional payslips requested and sent 

20/03 - second hard check done

22/03 - valuation took place 

26/03 - valuation report came back

Broker called Santander this morning and my case is due to be assessed by their underwriters tomorrow. What does this mean? Is it likely they will be asking for more docs during this state? 

Thanks for your help!  

K_S

Vp0007 said:

K_S said:

Vp0007 said:

Hey! What documents do lenders usually ask for if I am employed by a family business? (no shareholding, just PAYE employee but the business is owned by direct family). Application is with Santander. Thanks

@Vp0007 PAYE income from family business - this is the published evidence requirement for Santander

Thanks for your reply! 
My timeline is the following: 

13/03 - application submitted 

13/03 - hard check carried out 

15/03 - additional payslips requested and sent 

20/03 - second hard check done

22/03 - valuation took place 

26/03 - valuation report came back

Broker called Santander this morning and my case is due to be assessed by their underwriters tomorrow. What does this mean? Is it likely they will be asking for more docs during this state? 

Thanks for your help!  

@vp0007 I couldn't say tbh as it depends on the specifics of the application.

Cutting out all the fluff, with family business employment what the underwriter is looking for is plausibility and a reasonable level of confirmation that the income isn't contrived and/or temporarily inflated just to qualify for a mortgage or to boost borrowing.

To make a crude comparison - an applicant working part-time in a Tesco store until 3 months ago and now on a 50k salary in the family's owned sole petrol station would trigger more scrutiny that if the applicant has been working for 3 years as a manager on 50k for a family-owned Mcdonald's franchise with 5 restaurants in/around Manchester. These are both examples of employment in a family business, but the threshold for confirmation would be very different. I hope that makes sense!

Vp0007

K_S said:

Vp0007 said:

K_S said:

Vp0007 said:

Hey! What documents do lenders usually ask for if I am employed by a family business? (no shareholding, just PAYE employee but the business is owned by direct family). Application is with Santander. Thanks

@Vp0007 PAYE income from family business - this is the published evidence requirement for Santander

Thanks for your reply! 
My timeline is the following: 

13/03 - application submitted 

13/03 - hard check carried out 

15/03 - additional payslips requested and sent 

20/03 - second hard check done

22/03 - valuation took place 

26/03 - valuation report came back

Broker called Santander this morning and my case is due to be assessed by their underwriters tomorrow. What does this mean? Is it likely they will be asking for more docs during this state? 

Thanks for your help!  

@vp0007 I couldn't say tbh as it depends on the specifics of the application.

Cutting out all the fluff, with family business employment what the underwriter is looking for is plausibility and a reasonable level of confirmation that the income isn't contrived and/or temporarily inflated just to qualify for a mortgage or to boost borrowing.

To make a crude comparison - an applicant working part-time in a Tesco store until 3 months ago and now on a 50k salary in the family's owned sole petrol station would trigger more scrutiny that if the applicant has been working for 3 years as a manager on 50k for a family-owned Mcdonald's franchise with 5 restaurants in/around Manchester. These are both examples of employment in a family business, but the threshold for confirmation would be very different. I hope that makes sense!

Thanks, that makes sense! In this case, as the valuation has already been done, would this step (assessed by the underwriters) be the last step before the mortgage offer? 

elkie1010

Hello, I've been told by a broker that mortgage lenders are moving away from using Experian because they're getting "too big for their boots" but are any lenders still using solely Experian?