Nationwide Mortgage & Salary Sacrifice Car Lease

MrMoo28

Looking for some advice as to whether Nationwide are correct to interpret the below scenario or whether this is a flawed or unusual approach.

I, like many others I'm sure, have a 'company car' through salary sacrifice (via Tusker). It works in exactly the same way as pension contributions, my gross salary is reduced as a fee to the vehicle lease and thus there's tax/NIC savings (and also lowers my SL repayments). My payslip outlines what is happening line-by-line, i.e. total gross salary, then pre-tax deductions for pension and the Tusker car scheme.

I am currently applying for Nationwide's Green Additional Borrowing (0% 5 year) and it has initially been denied due to affordability. The primary reason given is my wife is dropping to 3 days part time from full time in January, so they are assessing her 60% FTE salary. However I also noticed a discrepancy in relation to my car payment as to how I'd have thought it would be dealt with.

When I did the initial DIP, I was told that salary sacrifice arrangements are not included in the assessment, however at the mortgage appointment they have taken the opposite view, and worse. They are listing the full pre-tax 'sacrifice' payment on the mortgage application in the Personal Loan / Hire Purchase box, meaning that my £1050 a month pre-tax payment is being treated the same as if it was £1000 coming out of my bank account. But a salary sacrifice lease isn't a loan, it isn't an HP/PCP, there is no line of credit attached to me. If I left my employer there is no balloon payment or additional fees or charges, the car is just handed back. This makes a major difference as they are effectively assessing that I have almost £600 of earnings that is already "spent" on a car loan when it is in fact not. 

Are Nationwide correct in this assessment, that they do not consider whether an expense is pre- or post-tax and will effectively overinflate an expenditure commitment by ~40% ?!

What makes this all the more ridiculous is we asked for the term to be the same as our main mortgage (29 years remaining), to set the monthly repayments as low as possible with our intention to save the difference between that and a 5 year term to pocket the interest and then pay off at the end of year 5. So we're talking about them assessing we can't afford £45 a month now, or £90 a month on the SVR after the 0% fixed period ends. When they are judging that we have ~£400 less a month than we actually do because of their assessment of a pre-tax payment as if it was post tax I am a bit lost for words.... 

ACG

They are assessing it as a commitment. 
There is no loan for childcare but it is still a commitment. 

Every month you have to pay £1,050.  

MrMoo28

ACG said:

They are assessing it as a commitment. 
There is no loan for childcare but it is still a commitment. 

Every month you have to pay £1,050.  

Indeed it is a £1050 commitment... of gross salary. But they seem to assess it the same as if someone has a car on PCP. The net commitment, which is surely what matters as we don't pay for much else in life tax free, is around 43% less than what they're actually assessing. I'm fairly sure if I tell them my salary is £x they'll be assessing what my actual net monthly income is. The more correct way for them to assess is surely to state in the assessment my gross salary after salary sacrifice deductions? 

ACG

They use your gross annual income. 
They deduct your monthly commitments from that. 

I get what you are saying, but that is not what nationwide do.

mlh1998

Hi have you gotten anywhere with this?
I have just been told when completing my DIP that salary sacrifices aren’t included so mine was input into travel costs instead which has bumped my affordability up.
I don’t want to start making offers for it to be declined at full application  

ACG

mlh1998 said:

Hi have you gotten anywhere with this?
I have just been told when completing my DIP that salary sacrifices aren’t included so mine was input into travel costs instead which has bumped my affordability up.
I don’t want to start making offers for it to be declined at full application  

A Nationwide employee have put a car lease down as travel on the DIP? 

mlh1998

ACG said:

mlh1998 said:

Hi have you gotten anywhere with this?
I have just been told when completing my DIP that salary sacrifices aren’t included so mine was input into travel costs instead which has bumped my affordability up.
I don’t want to start making offers for it to be declined at full application  

A Nationwide employee have put a car lease down as travel on the DIP? 

Yes, she clarified with a manager and they said this was correct.

They said a salary sacrifice car lease isn’t on credit and doesn’t go onto your credit profile so can’t be considered a loan or HP. 

Of course I have my suspicions the underwriters will perceive this differently when it comes to a full application 

ACG

What do they class a student loan as? 

I think they have that wrong personally. Its not about whether it is on your credit report, it is about whether it is a commitment or not. That being said, Nationwide will not always ask for payslips. I cant help but either think they are not very good at their job or they are trying to play the system to maybe help them get a bonus or hit a target or something. 

Database_Dave

Hi,
I nearly got stung by this with Nationwide this week.  Both my wife and I have cars on salary sacrifice schemes.  The underwriter was entering the gross amount into our application.  Thankfully the mortgage advisor had been at Nationwide a long time, and on reading the Nationwide Handbook it says that the NET amount should be keyed!!...  Makes me wonder how many applicants have failed affordability checks because of the incorrect amount (i.e. gross) being entered...

booksandbikes

Database_Dave said:

Hi,
I nearly got stung by this with Nationwide this week.  Both my wife and I have cars on salary sacrifice schemes.  The underwriter was entering the gross amount into our application.  Thankfully the mortgage advisor had been at Nationwide a long time, and on reading the Nationwide Handbook it says that the NET amount should be keyed!!...  Makes me wonder how many applicants have failed affordability checks because of the incorrect amount (i.e. gross) being entered...

Do you mean that the gross should be entered rather than the net? Surely you are more likely to fail affordability if net is used, rather than gross?

ACG

I dont think nationwide ask for gross or net monthly income. They ask for your gross annual income and then they ask about your expenditure in a seperate area from memory. 

Car lease, student loan etc should be entered under the relevent commitment sections.