Getting a mortgage and disguised earnings?

vixmony

Hi, I thought I would drop by and ask some advise, on behalf of a relative. They're going to buy a house soon and It turns out he's a private contractor, and he has some disguised earnings, paid via a loan scheme. Now they have applied for a mortgage, given a decision in principle however, he's submitted a payslip with less wages, than he's actually paid as the rest of the payments, are disguised as some kind of a loan payment into the same bank account. The issue is that the mortgage broker has now asked for them to provide bank statements and they will be able to see that he gets more money, coming in than he told the mortgage company. Will this be an issue with the mortgage company? that he gets more than he told them? Would they want to know the source of the other income?To be honest, from my end, I told him I would be more worried about him being locked up, by the tax man. 

london21

Let him sort it out.

Thrugelmir

Wait and see what the outcome is. Pointless speculatating. What is done is done. 

HMRC have a good nose for wrong doing, with access to multiple sources of information. Time is on their side also. No time limits apply. 

ACG

It may get questioned, but it is not necessarily an issue. I cant work out if what is being done is illegal or not, I would be grilling it if this were my case and I do not understand why the broker has only just asked for bank statements after the application has gone in.

However, I will assume nothing untoward. 
We regularly do applications for people and do not put in their full income, there are valid reasons for that - which I wont go into as I dont want to be giving your relative ideas if they are doing something dodgy. But if it is legit, there is nothing to worry about. 

vixmony

ACG said:

It may get questioned, but it is not necessarily an issue. I cant work out if what is being done is illegal or not, I would be grilling it if this were my case and I do not understand why the broker has only just asked for bank statements after the application has gone in.

However, I will assume nothing untoward. 
We regularly do applications for people and do not put in their full income, there are valid reasons for that - which I wont go into as I dont want to be giving your relative ideas if they are doing something dodgy. But if it is legit, there is nothing to worry about. 

Hi many thanks. The issue is that, this income comes from unpaid tax, loan scheme, so that's why he's worried. I did advise him, to withdraw the current application and get into a permanent post, as that way he will be able to provide real income and apply later for the mortgage in a few months. Issue is the application is already gone through to the mortgage broker and he's worried that this will now fail, as he cannot account for the payments, which are disguised from hmrc! 

Thrugelmir

Lenders can use the HMRC mortgage verification scheme to confirm someones salary and eradicate fraud. 

vixmony

Thrugelmir said:

Lenders can use the HMRC mortgage verification scheme to confirm someones salary and eradicate fraud. 

Hi yes I saw this. So does this mean, every mortgage broker is inclined to do so? 

Thrugelmir

vixmony said:

Thrugelmir said:

Lenders can use the HMRC mortgage verification scheme to confirm someones salary and eradicate fraud. 

Hi yes I saw this. So does this mean, every mortgage broker is inclined to do so? 

Mortgage lenders use the facility frequently. Underwriters will have an eye for the unusual. As stands out a country mile. The average persons affairs being mundane. 

ACG

You keep saying disguised income. I have no idea what that is. 
Lets simplify it - is it legal (in the same way as what Lewis Hamilton does is legal and classed as tax avoidance) or is it illegal (in the same way as what Jimmy Carr did and classed as tax evasion)? 

I dont really care on the answer, I am not on here to judge you but the answer will help me to give you a proper answer. 

vixmony

ACG said:

You keep saying disguised income. I have no idea what that is. 
Lets simplify it - is it legal (in the same way as what Lewis Hamilton does is legal and classed as tax avoidance) or is it illegal (in the same way as what Jimmy Carr did and classed as tax evasion)? 

I dont really care on the answer, I am not on here to judge you but the answer will help me to give you a proper answer. 

Hi yes it's definitely tax evasion, no doubt. 

ACG

OK...
Best case scenario - A relaxed lender may just use the income which can be verified. If that is enough this might slip through. 
Worst case scenario - It gets picked up and he gets reported. I am not sure puling the application will alter anything. A lot of lenders have systems to weed out fraud, so you could find it has already been flagged. 

Difficult to say what will happen for sure. I think a lot depends on the lender and the LTV. 

The broker needs sacking though. They should have picked up on this before the application went in, not that they can be blamed in anyway for what the relative is doing, at worst they are complicit.