OCCUPATIONAL MORTGAGES FOR YOUR CAREER
It’s only natural to assume that your income is the final deciding factor for a mortgage.
However, did you ever stop to think how you earn your income impacts being accepted?
With different forms of income in todays society, there are indeed different barriers for applying for a mortgage, depending on your occupation. Whether you’re self- employed, have a second job or making money from another source, every single financial detail will be accounted for when applying for a mortgage.
The harsh reality of it is, that you’re probably more eligible for a better mortgage as a professional over someone who is self-employed.
However, this reality doesn’t mean a great deal if you use the correct financial advice. As stated in todays society there are now more opportunities for self- employed, contractual and freelance work, which also means that lenders are now having to update their criteria; Otherwise, no one would stand a chance.
Having a second job is on the rise, because let’s face it, life is expensive. And going self-employed is becoming more and more popular, because being your own boss is becoming an encouragement for financial security. So, why should these individuals almost be penalised for making these life choices?
Some high street lenders just don’t have the right expertise when it comes to dealing with things as self- employment or methods of what they see as unstable income. Whereas St. Barts Finance have the tools and access to numerous lenders, who have the knowledge to help find you the right mortgage for your occupation.
Types of income
You may be wondering what different types of income there are and what occupations are affected when it comes to applying for a mortgage.
Here is a table below of the general types of income and what proof is required for them.
|Acceptable Income||Proof Required|
|Basic pay from occupation||Payslip|
|Second job (minimum 6 months)||Payslip|
|Car Allowance through occupation||Payslip|
|Income through commission||Payslip|
|Self- employed income||Account availability for 3+ years and Tax assessment forms|
|Investment Income||Value of investment documentation|
|State pension||Annual statement|
|Private/occupational etc. pension||Annual statement|
|Foster income||Documentation from foster agency|
|Benefit income||Bank statements and payment letters|
|Casual work/contractual||P60 and payslip|
From viewing this table, you may understand where your current occupation or income fits in, but also may be wondering if your job role itself may have anything to do with a mortgage application.
When looking at basic pay through an occupation, this can be broken down into selective jobs roles and what is more likely to be accepted.
For example, a professional role is the highest accepted applicant of occupation when it comes to mortgages. A professional is considered as a solicitor, teacher, accountant, vet etc.
These roles are considered professional as they are a fixed contract, fully qualified, governing body registered and with the likeliness of a pay increase somewhere down the line. The way in which these professions are paid are usually quite straight forward and easy to calculate. A mortgage will typically be calculated on the basis of four times their annual salary.
The reasons that professionals are more likely to be accepted is that they are considered a low risk to lenders. They have regular stable income and are likely to make repayments.
On the other foot, are key worker jobs such as nurses, paramedics, firefighters etc. who you would think are under the same bracket, but unfortunately are not.
This is all due to shift patterns, shift allowances, unsociable hours and overtime. Due to some lender’s limitations, they cannot factor in these particular forms of income with ease.
Because of the variance in monthly income, these job roles aren’t considered as stable regular income.
In these scenarios, the income is more than likely to be calculated on the lower paid months, or a calculated average to avoid any payments unable to be made.
This isn’t necessarily a bad thing, as it factors in affordability, it however means you may be limited in what you can borrow.
On a final note, is how self-employment can affect applying for a mortgage.
This doesn’t need to be a stressful process, if you are advised in the right way.
When it comes to applying for a mortgage when you’re self-employed, you just need to ensure you are organised and that all your figures reflect a true representation of yourearnings.
You want your income records and accountant documentation to show that your income has been both regular and stable for the last 2-3 years.
However, the risk with self-employed life is that it’s not always that plain sailing. This is why it’s important to seek advice from a mortgage advisor who can direct you to a lender who can tailor a mortgage to your self- employed needs.
In addition to occupation and income, there are also a few forms of income that are generally off limits when it comes to providing evidence on a mortgage application. Be mindful what you can and can’t use before you consider applying.
These may include:
- Third jobs
- Income support
- Educational grants
- Fuel allowance
- Short- term holiday lets
- Housing benefit
- Income from lodgers
- Bereavement allowances
Can I get a mortgage on a low income?
Having a lower income certainly doesn’t exclude you from being eligible for a mortgage, it just means you won’t be able to borrow as much. This is only for you own benefit as it’ll mean you can afford the repayments on your lower income.
There aren’t specific mortgages for lower incomes as such, but there are always ways to increase your likelihood of being accepted such as a good credit rating, paid off student loan etc.
It’s still an insightful idea to ask a financial advice for your options if you believe your income to be low for a mortgage.
What is a good credit score?
Your credit score is calculated using a point scoring system. This system is based on the number of credit cards you have open, your repayments, missed repayments, if you are registered to vote and a few other vital factors.
There are a few credit referencing agencies which use this score system, so no one answer is correct.
An example of a high score is through Experian. A good Experian score would be considered at 800. This score is the highest you can receive. 700 is considered good, but anything below 500 is rated as poor.
You can check these scores online or ask your financial advisor for assistance if you are wanting to check your score prior to applying for a mortgage.
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‘Your home may be repossessed if you do not keep up repayments on your mortgage.’