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Income Types - Non mainstream
There are a million ways to make a living, but not all of them are acceptable to mortgage lenders … or so you thought. Here we will look at the various income types for mortgages that you may not have considered viable for a mortgage. These include-
- Fixed Income
- Variable Incomes
- Mortgage with no Income
- Limited Liability Partnerships
- Trust Income
- Apprenticeship Wage
- Trainee Pay
- Bursary Income
- Dividends as income
- Mortgages on benefits
- Mortgages for self-employed
- Mortgages for professionals
- Mortgages if you have new job
- Zero hours
- Part time
- Temp workers
The main criteria for lenders is that any income declared is both sustainable for the life of the loan and is enough to make mortgage payments. These could include salary and wages, bonuses, commission, shares, allowances, dividends etc. We’ll also touch on mortgages for those who rely on benefits of one sort or the other.
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How your job can influence getting a mortgage
People who are self-employed have the possibly the widest range of ways in which they are paid. This includes freelancers with multiple clients, contractors with a single client, business owners and company directors. For all the ins and outs on self-employed incomes and how they relate to mortgages, just click this link.
These can include doctors, teachers, architects, senior civil servants, armed forces personnel, nurses and many more. Pay can increase significantly as they rise higher in their careers. Some lenders may take in to account ‘future earnings’ when considering a mortgage application. For more info on different professions click here.
Most lenders require at least 3 months worth of payslips before considering a mortgage application. Some may accept less time in employment and a few could accept even less if an iron clad employment contract could be produced. More info on getting a mortgage when starting a new job.
Zero hours contract
There more people on zero hours contracts than ever before. While many believe they can fulfil financial commitments such as a mortgage, the automated processes that many lenders use usually do not take into account such circumstances. There are a few lenders who will consider zero hours contracts, and the advisors we work with know who they are.
Lenders are more concerned with your ability to service the loan, than how many hours you work. So if you have the income and a suitable deposit, there shouldn’t be a problem in obtaining a mortgage. More info on part time jobs can be found here.
Most lenders will want to see that you can make your monthly repayments over the course of the loan. Some are happy with certain types of temporary worker, such as doctors and IT workers. Remember that all lenders are different and may take applications on a case-by-case basis. More info on mortgages for temp workers.
Fixed Income Mortgage
A fixed income covers a number of scenarios, including pensions, and many are considered an acceptable risk to a lender. Others include securities, which is a type of investment where the issuing company is required to pay the recipient a fixed amount on a certain date.
- Loan Stocks
- Government Bonds
- Fixed Interest Securities
- Disability Pensions
There are a number of lenders who will consider an application from an individual on a fixed income and whether you could be eligible for a fixed income mortgage, is dependent on a number of factors –
- Your level of income
- How much you wish to borrow
- How much deposit you have
- Your credit history
There’s some good news if you’re in receipt of disability benefits, because there are a few lenders who are more than happy to accept disability benefits as income when it comes to applying for a fixed income mortgage. To mitigate any additional risk of benefit income vs earned income, some will cap lending to a certain % of your income, so for example @ 75%, if you receive £20,000 in benefits, they will allow you to apply as if you are earning £15,000. We work with a number of advisors who are experts in this area and they will work with you to try to achieve the best possible deal.
Getting a mortgage with variable income
Variable income can cover a whole range of jobs and professions, from those on low income with high commission (this may include people in the car sales industry), those on zero contract hours or freelance contractors on variable hourly rates. Lenders will look at your application as a whole and look at your income record as well as your possible future income to meet mortgage criteria
Getting a mortgage with no income
If you really want to see how good the advisors we work with are, then ask them about getting a mortgage with no income. Few lenders will look at a mortgage with no income, but there are some exceptions. You may be an experienced landlord or someone with high net worth, but no income. You’d have to prove you have huge stash of cash lying around to show you can service the loan until you get a job or other income stream. Every mortgage lender in the UK now has the responsibility to ensure the borrower can afford the loan, so all will make some form of “check”. That said, there are certainly some lenders that are much more flexible than others when it comes to acceptable types for instance:
- If you’re self employed and don’t have a long trading record, but you can prove future earnings and have an accountant willing to put a projection in writing, then they may consider your application
- If you’re set to start a new job in the future, a nice juicy contract just might do the trick.
- If you own a company with profits but are choosing not to draw them out, so have little/no personal income, there are some lenders happy to accept your share of retained profits.
There are a variety of reasons why someone might want a mortgage with no current income, and a number of lenders happy to consider justification on a case by case basis. If you’re reading this and want to know if you’ll be approved, make an enquiry and one of the specialists will give you the best advice.
Limited Liability Partnership Mortgages
In its simplest form, a Limited Liability Partnership does what it says on the tin. An LLP allows you to be in a partnership without risking your own assets. For taxation purposes, an LLP pays no corporate tax, instead each member is treated as self-employed (many law and accountancy firms are set up as LLP’s), and so members will need to prove income just like any other self-employed individual. This means many lenders will require 3 years of accounts, although some will require as little as one or two years accounts and a few less than 12 months subject to certain criteria. Buy to let mortgages for LLP’s are usually available from lenders who also arrange BTL through a Limited Company. In most cases the lending criteria is pretty much identical. We work with specialist advisors who can help you find a lender who will consider an LLP mortgagee, including re-mortgages and ‘buy to let’ mortgages for LLP’s.
Trust Income Mortgages
A trust is usually set up to manage assets such as money, investments or property. The first thing you need to do is find out if the trust has the authority to borrow money for a trust fund income mortgage, which is not always the case. A trust income mortgage is an excellent way of getting your child onto the property ladder (and you could save a lot of money in rent in the long term). It’s also an opportunity to be able to avoid capital gains tax and inheritance tax, so it’s a good financial decision for all parties. Someone will have to act as trustee to manage the trust and the trust income for the mortgage. So, what is a mortgage trustee? Simply put, the mortgage trustee definition is someone who manages the trust on behalf of, and for the benefit someone else. Lenders tend to distrust trusts (if you’ll excuse the pun) because there is a lack of personal liability, so if you’re using trust income to qualify for a mortgage, it is common for someone to act as guarantor for the debt.
Is income from a trust acceptable for getting a mortgage?
The short answer is yes. If you are receiving a regular income from a trust, then that can be considered as income for a mortgage. There are lenders who will accept 100% of income from a trust fund. Of course the usual criteria apply and you may be asked to provide tax returns for up to three years. Again, your level of income, ability to service a mortgage, your deposit and credit history will all play a part. As a trust income mortgage is such a specialist area, you’ll need help from one of the advisors we work with to ensure you get a positive outcome.
Can I get a mortgage as an apprentice?
Apprentices are often paid a notoriously low wage as the company employing them see them as an asset for the future, rather than a fully productive employee from the word go, so the question is, can an apprentice take out a mortgage? If you, or your son or daughter, are looking for a mortgage on an apprenticeship, there are a number of criteria that a lender will take into account.
- Basic wage or salary (some lenders have a minimum)
- Overtime / bonus paid (some lenders accept 100%, others limit amount used)
- Job security (are you likely to be offered permanent role? If there’s no guarantee, then more lenders will have an issue with this.
- How much you want to borrow (is your income enough to afford repayments?)
- How much deposit you have saved (you’ll need a minimum of 5% deposit, more if you’ve had bad credit or another reason lenders may not consider your application).
- If your parents / family are willing to help financially (there are a variety of options where they can assist, either through deposit or using their income as guarantors)
If you’re a trainee, mortgage providers will also look at a similar set of criteria and tend to look at each case individually. So, if you want to know, can I get a mortgage being an apprentice? The best course of action is to sit down with a mortgage advisor – not just any mortgage advisor, but one of the ones we work with who specialises in this area. It could mean the difference between getting a mortgage as an apprentice or not.
Can I get a mortgage with a bursary?
An NHS bursary is a monthly payment made to students to help with living costs and tuition fees. The beauty of these payments is that they are not affected by income tax or national insurance payments, so all of the amount paid is available (apart from some private bursaries in certain scenarios). As usual, many lenders have different criteria and can look at each NHS bursary mortgage application on an individual basis. The factors that would be taken into account include –
- Annual bursary amount (some lenders have minimum acceptable incomes)
- If you’re entitled to Disabled Students Allowance (this can help affordability)
- Any additional income from part time work (as above)
- Are you likely to go into employment once the bursary training period has ended? (if not, lenders are less likely to accept you)
- How much deposit you have (you’ll need at least 5%, more with many lenders)
- If your parents are willing to help financially (either with deposit or helping you afford repayments as guarantor or joint owners)
We believe that as a vital NHS worker, you shouldn’t be disadvantaged when it comes to owning your own home, so we’ll put you in touch with one of the best advisors we work with who will do everything in their power to try to get you the best mortgage on the market.
Do dividends count as income for mortgage?
Many business owners and directors pay themselves a relatively low salary, then top it up with dividends. So, if you want to know if you can get a mortgage using dividend income, the short answer is ‘yes’, dividends do count as income for a mortgage. For a dividends mortgage application, the usual affordability criteria apply, and you can find out more about how mortgages on dividend income or using retained profits for mortgages can be used here. If you’re business owner, there are some lenders who will also take into consideration retained profits for a mortgage application, which means you may well be able to borrow more than you think if lenders are just looking at drawings you’ve made from the business. Talk to one of the advisors we work with to see how you can use this to your best advantage.
Getting a mortgage on benefits
The question we are often asked is, can you get a mortgage on benefits? This depends on many factors. The short answer is, yes, it’s possible you can get a mortgage while on benefits. Some lenders may accept the following benefits provided you are either retired or in full time employment and they may be used to increase your affordability:
- Child tax credit
- Working tax credits
- Child benefits
- Disability Living Allowance (DLA)
- Industrial Injuries Benefit (IIB)
- Incapacity benefit (IB)
- Attendance Allowance
- Pension Credits
- Maternity Allowance
- Severe Disablement Allowance
- Widow’s Pension
- Carer’s Allowance.
However, some lenders will not accept any form of state or employer benefits towards your income when assessing a mortgage application.
Mortgage on benefits – FAQ’s
Can you get help with your mortgage if on benefits?
You cannot get help with getting a mortgage to buy a home, but if you already own a home, you may be entitled to help with the mortgage interest.
What Benefit Income is Acceptable?
There are a few lenders who will accept pensions or Disability Living Allowance (DLA) as income when accessing your ability to service a mortgage. Other benefits may count towards overall income on a lender by lender basis.
What about unemployment benefits (JSA)?
There are some lenders who will consider an application from someone on certain kinds of benefits. Talk to one of the advisors we work with who specialise in this area.
Can I use child support as income for mortgage?
While many lenders don’t consider child support to be part of your income, there are a few that will take it into account.
Does maintenance count as income for mortgage?
Yes, some lenders accept up to 100% of maintenance income. It will depend on the lender and you would generally need a history of maintenance payments to be considered, or a court order for them to be paid. The age of the children is also a factor, as some lenders will only lend if the children are under a certain age, to ensure the benefits are likely to continue for a reasonable period of time.
Can you get a mortgage on disability benefits?
Disability Living Allowance (DLA) is considered income by quite a few lenders when it comes to applying for a mortgage. The usual criteria would apply and remember, if you meet their conditions, they cannot refuse you a mortgage because you are disabled.
Do tax credits count as income for a mortgage?
While some lenders won’t accept tax credits, there are a few lenders who will accept tax credits as income. This can vary, with some lenders accepting 100% of the credit toward income, while others can cap it at 60%.
Which mortgage lenders accept tax credits?
There are lenders that accept tax credits as income for a mortgage. You’ll need to provide bank statements or letters from the relevant government organisation to substantiate your claim. Talk to one of our advisors to find out your best options and which lenders will suit your circumstances in regard to mortgage tax credits.
Can I get a mortgage with no income?
Very few lenders will consider an application for a mortgage with no income. One option is family assisted mortgage schemes and it would need to be secured against a family members property. Either way, they would then need to evidence affordability under requirements of the FCA toward responsible lending.
Can I get a mortgage with no income verification?
Getting a mortgage with little/no income evidence is often a problem faced by the self-employed or those on contract work. The days of self-assessment of income are long gone, but that doesn’t mean that there are not lenders who would consider your application. There are various people able to borrow now in all manner of circumstances, such as newly self-employed, temporary workers, and contractors on day rates. Talk to one of the mortgage experts we work with to see what your options are.
How can I get the right advice on income and mortgages?
The advisors we work with have access to the whole market, and as an experienced broker, they will know the ins and outs of which lender accepts what types of income. Call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here. Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.
Non-Standard Income Type Mortgage Help
Looking for the expert best able to tell you accurately what your options are? Read through our articles or make an enquiry to speak with one fo the specialists.
Income Types Overview
Proof of Income for Mortgages
Zero Hour Contracts
Part Time Jobs
Pension Income for Mortgages
Using rental income
Using foreign income for a mortgage
Low Income Mortgages
Mortgage as a Freelancer