Does my Income Qualify me for Shared Ownership?
When assessing a shared ownership buyer there are many different income types which could be used. So, let's try to outline the various types, how we generally treat and evidence them. We should point out that with any application, every case must be looked at on its own merit. So, without further ado!
Not much of an explanation needed, this would be considered the “norm”. Most lenders want 3-6 months employment, but some will work off as little as a job contract starting within next 3 months.
The majority of lenders are looking for 2-3 years of sustainable income. By this I mean not declining net profits or declining salary/dividends without a reasonable explanation. Some lenders will work off as little as 1 year’s accounts.
It’s not a problem to use a second job (or even third income) providing its sustainable. So, what does this mean? If the customer is working 2 jobs, has been for some time (normally 6-12 months) and the hours are reasonable (not 7 days per week etc) then this could be considered sustainable.
However, we’ve had some customers apply with 2 jobs, one of which they’ve only worked for a month, both 35 hours. With no history of doing the 2 jobs together you would question how sustainable this is. Have they just got a job to boost their income for a mortgage application? Whilst a customer may do anything to boost their income to achieve their house, we need to protect.
Again, the question is around sustainability. If someone has worked a self-employed job alongside an employed job for several years managing both at the same time, there would be no cause for concern. However, concerns would be raised if the customer has recently increased their hours within the employed job, whilst claiming it would have no impact on the self-employed role, or even taken up an employed job as their main form of income. In these situations, we would generally not look to use the self-employed income until the customer can demonstrate income proof working their new scenario.
Zero-hour contracts are perfectly acceptable to use providing there is a good job history. Most lenders want at least 12 months within the contract although we do have at least one lender who will accept 6 months. The reason? As is the theme of this article, it all goes back to sustainability! The risk with someone on a zero-hour contract is that the hours can vary so much, so the lenders would want to take an average and make sure the income is regular so the customer will be able to afford the mortgage on all months.
Written by Emilia Hunt, Sales Director at Metro Finance
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