Loans for people who have problems with income

Following from my recent email about adverse credit, I have been asked to circulate something to brokers regarding income specifically showing points they may be missing out on.

It’s fair to say we now get more calls from brokers who recognise the niches we have regarding incomes. However the following should give you more of an overview.

Loan to income multiples

We have two lenders which impose a maximum loan to income multiple of 6x. The rest simply don’t. If you only need 4 or 5 X gross income, it should be easy to find a lender available. If you need much higher multiples it is not unusual for us to offer the equivalent of 7x to 10x gross income.

Income and expenditure calculations

The lenders which don’t rely on loan to income multiples tend to use an income and expenditure assessment.

If your remortgage is failing on income multiples we have a wide range of alternative calculations. Because they just work on affordability, such calculations are of particular benefit to higher earning applicants (especially with out children), single applicants and those on interest only or low mortgage interest rates.

These use the actual or reasonable living expenses of the borrowers taking in to consideration the net income and house hold outgoings.

Often using this means of demonstrating affordability can equate to income multiples in the region of 10X

Key Criteria & Application Guidance

Self employed income Different lenders have different rules so it is difficult to generalise. However, in the absence of accounts which show sufficient income, here are some options our lenders can consider to support affordability:

• Primary Factor: An accountant’s projection for the coming year
• Second Element: The last 3 months business or personal bank statements show regular income
• Third Aspect: SA302’S
• Additional Point: A letter from the borrower’s accountant confirming the customer/business can afford the repayments
• Fifth Consideration: A declaration of income and affordability from the borrowers supported by an income and expenditure assessment
• Sixth Criterion: A business plan to support affordability and proposed use of business loans where there is no proven affordability at present
• Seventh Option: Initial payments rolled up into the advance to assist cash flow and support business growth or short term projects.

Benefits, allowances etc

Various lenders have different views but we can use most benefits and fund loans where the only income is benefits and allowances.

All need to be proven but bear in mind how long they will continue for – for example child allowance. Maintenance can use if backed by a court order.

I recommend you call us if you have any queries.

Understanding Market Rates & Repayment Terms

Other factors affecting affordability

secured loans are often used as a short term solution pending a refinance or sale some months or years later. There are therefore other strategies which may be appropriate in the shorter term or features which can be beneficial as follows:

• Interest only loans – including those in retirement
• Borrow up to age 80 at the end of the loan term ( in some cases over 80)
• Short term loans with all /some repayments rolled into the advance
• On BTL’s (including first charge) use rental income only – no rental buffer or separate income needed
• Loans to businesses – if no provable income can arrange term loans based on business projections

As ever, I hope this overview is helpful and prompts you to call Promise to see how we can help you place your next remortgage decline.

www.promisemoney.co.uk

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