UK Tax Credits, Maintenance Payments and Mortgages
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It's the same as many of the variables in the mortgage application process - some lenders accept tax credits, and or/maintenance payments as income, some a percentage of them, some, one but not the other, some will under certain circumstances, some do not accept them at all.
The difficulty isn't finding a lender who will accept tax credits and maintenace payments, it's finding a lender who will accept them, and who's other criteria the applicant meets.
Often, lenders who accept these types of income, will have low income multiples, or something else that means no deal is possible.
A typical scenario is where a couple divorce, or separate. Usually, one party has the children, and receives maintainence, plus tax credits, in addition to their salary. Often, this means that their net income is sufficient to maintain a reasonable mortgage, but they are unable to get a high enough mortgage to buy the type of property that they want.
There are some sensible reasons for this:
a) If maintenance ceases, or reduces, the mortgage may become unaffordable, and
b) Eligibility for tax credits may cease, or the tax credits be withdrawn, or altered by goverment policy.
However, it does seem somewhat harsh that two applicants with the same net income can be offered vastly different loan amounts.
To illustrate the difference that lender policy can make here's an example:
Salary £14.200, Maintanance £2912, Tax Credits £2012
Maximum mortgage offered by Northern Rock = £75,300
Maximum mortgage offered by another lender £101,006
The applicant has no other debt, a good credit score, and a large deposit.
The larger amount offered could make the difference between living in a home that you want, or a home that you are almost forced to choose.
Get the inside information on mortgages from a broker with over 12 years experience in the UK market at UK Mortgages www.yourukmortgage.co.uk
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