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Tronc income taken into account in affordability calculations for home purchase

Tronc income taken into account in affordability calculations for home purchase

The clients: A Slovakian couple living in the UK approached us for help in finding a home-buyer mortgage. Both husband and wife work together in a local restaurant. They own their current home outright and intend to turn it into a buy to let rental property once settled in their new home.

The property:  They had set their sights on a semi-detached house in Liverpool, a short walk from their current home. Valued at £171k, it has six bedrooms, two reception rooms, three bathrooms and a large kitchen/diner.

The finance: Prior to approaching Mortgages for Business, the couple had gone directly to their bank for a mortgage. Unfortunately, the bank wasn’t willing to take their income from tips (known to HMRC as tronc income) into consideration. For this reason, their application had been declined, and so they asked for our help.

The application process: With access to the whole of market, we knew exactly which lenders we could approach. Working closely with the couple, we decided to take the case to a different high street bank, one which does take tips into account when assessing affordability, as long they are itemised in the payslips. The bank also likes to see six months' of payslips in support of the mortgage application, together with proof of address, residency and identity, and details of any outgoings.

Happy that the couple’s total income didn’t vary too greatly month to month, the bank made a formal mortgage offer within two weeks of submission. Here are the details of the deal:

 

Property Details

Property value: £171,000

Loan amount: £151,000

LTV: 88%

Rate: 2.49% fixed for 5 years

Term: 21 years capital and interest 

Mortgage payment: £775 pcm 

Lender arrangement fee: £995 added to the loan amount

Consultant: Erin Gallacher, 01625 416392

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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Mortgages for Business Ltd is authorised and regulated by the Finance Conduct Authority (No. 313537) to transact regulated mortgages. We are a credit broker, not a lender. We work with the whole of market in sourcing a lender for you; we may receive a commission from the lender, and this amount varies between lenders. The FCA does not regulate some investment mortgage contracts. Mortgages for Business Ltd is a founding member of the National Association of Commercial Finance Brokers, the body that promotes best practice within the commercial finance industry. Telephone calls may be monitored or recorded for training purposes.

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