Sources of Income


Income from Self Employment Max Acceptable Proportion (%) Proof(s) Required
Sole trader/partnerships 100 of applicant's share of net profit For loans of up to £500,000, accountant's certificate covering at least the last 2 years.
Director's remuneration 100 For loans up to £500,000, accountant's certificate covering at least the last 2 years.
Director's dividends 100 For loans up to £500,000, accountant's certificate covering at least the last 2 years.
Income from Other Sources Max Acceptable Proportion (%) Proof(s) Required
Car Allowance 100 P60, payslip or employers reference as appropriate
Carers/Attendance Allowance varies Treat as disability allowance.
Educational grants/bursaries 0 N/A
Child benefit/family credit/working families tax credit/disabled person's tax credit/pension credit 0 N/A
Fostering varies Contact your mortgage centre who will obtain advice from Senior Underwriters in each case
Housing Benefit 0 N/A
     
Lodgers 0 N/A
London Weighting 100 P60, payslip or employers reference as appropriate
Maintenance (including payments via the Child Support Agency) varies See details below
Other State Benefits varies See details below
Private Pension 100 See details below
Rental Income varies refer to Clients with additional properties
State Pension 100 See details below

Footnotes

Maintenance

If it is received under the terms of a Court Order or a CSA assessment this form of income may be used. A copy of the maintenance agreement must be provided and we won't accept payments that have not been received satisfactorily for at least 12 months (and at the current level for 3 months).

Pensions

Pension income is an acceptable form of income. For a state pension, check the applicant's pension book for details of the amount received and provide copies of the front and first two inside pages for proof of pension or provide a copy of the applicant's annual statement from the Benefits Agency. The annual statement of pension or a letter from the pension provider must be provided for a private pension.

Second/Third Jobs

Income from a second job, including overtime, bonus and commission, may be accepted if it has been received for at least 6 months. The latest P60* and payslip must be obtained or an Accountants Certificate if the second job is classed as self employed (refer to 'self employment' criteria). Where the P60 figure is insufficient to support the loan requested (or unavailable due to short time in employment), use the payslip figure.

*Where a P60 is unavailable due to short time in employment it is acceptable just to obtain a copy of the latest payslip as income proof.

Income from a third job must not be included in the Affordability Calculation.

Maternity

When taking a pregnant woman's income into account, only include in the Affordability Calculation the income that the applicant expects to receive after maternity leave. Confirmation in writing that the applicant intends to return to work must be obtained. In the Affordability Calculation include any additional expenses that the applicant expects to incur on her return to work, e.g. child minding.

State Benefits Specifically for the Disabled

There are several state benefits, which may be paid to a disabled person. The most common of these are:

  • incapacity benefit
  • disability living allowance

Any benefits paid because of a disability, with the exception of Disabled Person's Working Tax Credit, may be treated in the same way as earned income, provided that the applicant can show a letter of entitlement, or other suitable evidence, confirming the amount being paid . We will only exclude a benefit if the applicant has been told that it's payment will cease on a stated date in the near future.

We will be cautious where payment of a benefit is subject to regular review as this suggests it could be withdrawn. Where the mortgage approver is satisfied that withdrawal of the benefit is unlikely we will treat it the same way as earned income in the Affordability Calculation.

Disabled Person's Working Tax Credit (DPWTC)

This is a Tax Credit to help people with an illness or disability who are in work. The tax credit will only show on a payslip, and not a P60. DPWTC cannot be used as earned income because it is subject to a review every 26 weeks.