- 020 8124 9007
- mark@albionforest.co.uk
Menu
Our ultimate guide to what income you can use for a mortgage. Everything you need to know.
You voluntarily choose to provide personal details to us via this website. Personal information will be treated as confidential by us and held in accordance with GDPR May 2018 requirements. You agree that such personal information may be used to provide you with details of services and products in writing, by email or by telephone. By submitting this information you have given your agreement to receive verbal contact from us or one of our trusted partners to discuss your mortgage requirements
by Mark Robinson, Director – Albion Forest
When it comes to buying a house in the UK, one of the most important things to consider is how you plan to pay for it. Mortgages are the most common way of financing a property purchase, and the amount you can borrow will depend on a number of factors, including your income. In this article, we will explore the different types of income that can be used for a mortgage in the UK.
The most common type of income that is used for a mortgage is employment income. This is the money you earn from your job, and it is usually paid to you on a regular basis, such as monthly or weekly. Lenders will typically want to see a few months’ worth of payslips to verify your income, and they will also look at your employment history to see if you have a stable source of income.
If you are employed full-time, your lender may use your basic salary to calculate how much you can borrow. If you receive bonuses, overtime, or other types of additional income, this may also be taken into account. However, lenders will typically want to see a track record of this additional income, and they may only use a percentage of it when calculating how much you can borrow.
If you are self-employed, you can still get a mortgage, but it may be more challenging. Lenders will want to see evidence of your income, which can be more difficult to provide if you don’t have a regular payslip. You may need to provide several years’ worth of accounts to demonstrate your income, and your lender may use an average of your income over that period to calculate how much you can borrow.
It’s worth noting that some lenders may be more accommodating to self-employed borrowers than others. If you are self-employed and looking for a mortgage, it’s a good idea to speak to a mortgage broker who can help you find a lender that is more likely to approve your application.
If you own a rental property, you may be able to use the rental income to support your mortgage application. Lenders will typically want to see evidence of your rental income, such as tenancy agreements or bank statements showing rental payments. They may also take into account any expenses associated with the rental property, such as maintenance costs.
It’s worth noting that not all lenders will accept rental income when calculating how much you can borrow. Some may only use a percentage of the rental income, while others may not accept it at all. If you are relying on rental income to support your mortgage application, it’s important to speak to a mortgage broker who can help you find a lender that is more likely to approve your application.
Saving for a deposit can be a challenge, especially for first-time buyers who may be starting from scratch. However, there are several ways to save for a deposit and make the process more manageable.
One of the most effective ways to save for a deposit is to set a savings goal and make a plan. This involves setting a target deposit amount and working out how much money needs to be saved each month to reach the target. Budgeting can also help to identify areas where spending can be reduced or cut back.
Another way to save for a deposit is to take advantage of government schemes, such as the Help to Buy ISA or Lifetime ISA. These schemes offer a tax-free bonus on savings that are used towards a deposit, which can help to boost the amount of savings that a first-time buyer has available.
It’s also worth considering alternative sources of funding, such as gifts from family members or a guarantor mortgage. A guarantor mortgage involves a family member or friend guaranteeing the loan, which can help to reduce the deposit required and make it easier for the first-time buyer to secure the mortgage. However, it’s important to remember that taking on additional borrowing or support can also have potential downsides, so it’s important to weigh up the pros and cons carefully before making a decision.
If you have investments, such as stocks, shares, or bonds, you may be able to use the income from these investments to support your mortgage application. Lenders will typically want to see evidence of your investment income, such as bank statements or tax returns. They may also take into account any expenses associated with your investments, such as management fees.
It’s worth noting that not all lenders will accept investment income when calculating how much you can borrow. Some may only use a percentage of the investment income, while others may not accept it at all. If you are relying on investment income to support your mortgage application, it’s important to speak to a mortgage broker who can help you find a lender that is more likely to approve your application.
If you are retired and have a pension, you may be able to use this income to support your mortgage application. Lenders will typically want to see evidence of your pension income, such as pension statements or tax returns. They may also take into account any expenses associated with your pension, such as management fees.
It’s worth noting that if you are relying solely on pension income, you may find it more challenging to get a mortgage. This is because pension income is typically less stable than employment income, and lenders may be more cautious about lending to retirees.
If you receive benefits or tax credits, you may be able to use this income to support your mortgage application. However, not all lenders will accept benefits and tax credits when calculating how much you can borrow. Some may only use a percentage of this income, while others may not accept it at all.
It’s also worth noting that if you are relying solely on benefits or tax credits, you may find it more challenging to get a mortgage. This is because this type of income is typically less stable than employment income, and lenders may be more cautious about lending to borrowers who rely on benefits or tax credits.
There are other types of income that may be used to support a mortgage application, such as child maintenance, alimony, bursary income, Stipend income or income from a trust. However, not all lenders will accept these types of income, and some may only use a percentage of them when calculating how much you can borrow.
It’s important to note that lenders will also take into account your outgoings when assessing your mortgage application. This includes your regular bills and expenses, such as utilities, council tax, and any other debts you may have. Lenders will want to ensure that you can afford the mortgage repayments, and that you have enough money left over to cover your other expenses.
In conclusion, there are many different types of income that can be used to support a mortgage application in the UK. Employment income is the most common, but self-employment income, rental income, investment income, pension income, benefits and tax credits, and other income sources may also be used. However, not all lenders will accept these types of income, and some may only use a percentage of them when calculating how much you can borrow. If you are unsure about whether your income will be accepted by a lender, it’s a good idea to speak to a mortgage broker who can help you find a lender that is more likely to approve your application.
You voluntarily choose to provide personal details to us via this website. Personal information will be treated as confidential by us and held in accordance with GDPR May 2018 requirements. You agree that such personal information may be used to provide you with details of services and products in writing, by email or by telephone. By submitting this information you have given your agreement to receive verbal contact from us or one of our trusted partners to discuss your mortgage requirements
Looking for specific Teacher Mortgage information? Try our dedicated team at Teacher Mortgages.
For NHS Mortgages try our team at Mortgages for Doctors. For Joint Borrower Sole Proprietor (JBSP) Mortgages contact our dedicated team at JBSP Mortgages.
For all your Estate Planning needs we recommend Albion Forest Wills
Albion Forest, Unit 9 Talisman Business Centre, Duncan Road, Park Gate, Southampton, SO31 7GA
By clicking external links you are departing from the regulatory site of Albion Forest Ltd. Neither Albion Forest Ltd or PRIMIS Mortgage Network is responsible for the accuracy of the information contained within the linked site.
Registered in England & Wales number: 12714552 Albion Forest Ltd is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of Advantage Mortgage Funding Limited which is authorised and regulated by the Financial Conduct Authority. Our standard fee is up to 1 % however our typical fee starts at £199.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
