Proof of income

For those who are employed, income proof is simply evidenced by your payslips and P60.B From these documents, the lender can see what income is received.B Bank statements are forensically examined to see what the applicants spending is like and this information is entered onto the lenders affordability calculator. This then produces a figure that the lender will make their bdecision in principleb upon.B This can change of course once a full application is made to the lender.

For the self-employed, it is a different ball game.B Lenders now routinely ask for three years accounts and SA302s. SA302’s are a document provided by HMRC which will confirm your exact declared income for income tax purposes in any given tax year. Accounts can be falsified so SA302s are more reliable to the lender and show the exact amount of tax paid and income declared.

Since 2009, HMRC have issued SA302s upon request but these documents can take weeks to arrive.B It makes sense to plan ahead when contemplating making a mortgage application to take into account these delays, especially if purchasing another property with a chain.B The estate agent will put pressure on the parties involved to get the sale completed as soon as possible so they can get their commission, so to avoid headache and stress, get your accountant to order SA302s from HMRC well in advance.

These requirements apply both to residential and buy to let mortgages and remortgages. The FCA is taking more control of buy-to-let from 2016, so it is likely the lending criteria may be restricted and the need for verification of income even more onerous. This will likely apply in due course to commercial finance loans.

Most lenders will lend 75% of the property value for buy-to-let with some lending up to 80%.B 85% is available for purchases from some lenders.

One area that needs to be considered is rental income.B Lenders will often require that the rental income is 125% of the mortgage payment.B This is to provide a buffer during void periods and to account for slight increases in rate and costs.

We can arrange protection for the clients in the form of life assurance and buildings / contents insurance.

If you would like more information on any of the above or to discuss a residential, commercial or buy to let mortgage enquiry, please contact the team on 01277 630183.

Central Mortgages (Essex) Ltd

T: 01277 630183 F: 01277 632878 E: office@centralmortgages.net.

#sa302 #HMRC #centralmortgagesessex #proofofincome #buytoletmortgages