Remortgage income types

Income types and remortgages for UK properties – How they work and what steps to take

Remortgaging your property ensures you enjoy the best interest rates and deals on the market. Unfortunately, there can be factors that can make this more challenging such as age or employment.

This article will explore the different employment types that might make remortgaging more difficult and explain what you can do to make things easier, regardless of how you get your income.

Income Type Remortgage Guide

One of the most important things that mortgage lenders look for in applicants is the ability to make their repayments. Affordability checks are a big part of the application process, and how you get your income plays a significant role in this.

Mortgage lenders look for low-risk candidates, and the ability to make your monthly payments will be scrutinised.

Not all people enjoy straightforward, full-time employment, and this can make mortgage applications challenging. This is where making use of an experienced mortgage broker can be useful.

Here at Loan Corp, we provide expert advice for anyone looking to borrow, so if you have any questions about your employment status and its impact on you getting a mortgage, get in touch today.

The following income types can make getting a mortgage more difficult but not impossible.

Self-Employed Income

Remortgaging can be more difficult if you have moved from a full-time position to being self-employed since you took out your original mortgage.

Showing evidence of your income is a significant part of affordability checks, and it can be more challenging for lenders to assess self-employed applications.

For self-employed people to remortgage, you must have finalised accounts, pay slips, and your self-assessment tax return (SA302) to hand.

Some specialist lenders offer facilities for self-employed remortgaging and will typically require accounts dating back three years. In some cases, lenders can consider 1 or 2 years’ worth of accounts.

Freelancer

Freelancers will typically have to provide the same details as self-employed people. If possible, having evidence of a contract renewal or fixed-term contract can help, especially if there is still a significant amount of time left to run on it.

The amount you earn as a freelancer will probably be the most important factor during consideration.

Commission and Additional Bonus Income

If your income is commission based or you rely on additional income from bonuses or overtime, lenders may see you as a greater risk, making it more difficult for you to remortgage.

The best way to approach this situation is to check what lenders need and see which suits the way your income is structured. Whether your commission or bonuses are paid weekly, monthly, quarterly, or annually, options will typically be available.

Speaking with a mortgage broker can help you find suitable lenders without the time and hassle it would take to approach them all individually to get the information you need.

Zero Hours Contracts

Those on zero-hour contracts might worry that there may not be many options for them, and while options are limited, they are available.

Mortgage providers will prefer you to have been with the same employer for over 12 months to show consistency. However, there are lenders that will consider all cases.

Part-Time

If you have moved down from full-time to part-time hours in the time since you agreed on your first mortgage deal, it shouldn’t affect your application as long as you are still making enough.

Lenders will look at your income level, as well as the equity in the property, when processing applications.

Additional income sources or assets can also benefit your remortgage application.

Rental Income

Landlords that rely on rental income will need to provide bank statements and tenancy agreements to show proof of this regular income during their mortgage application.

Some lenders don’t consider income from rental properties for remortgages. However, an experienced broker will know lenders specialising in these kinds of deals.

Having as much paperwork as possible to back up your application is advised.

Investment Income

Additional income from investments and assets like stocks and shares can be useful for remortgage applications. Not all lenders will factor this into your affordability check, but some will, especially if you have evidence of regular dividends from investments.

Seeking specialist lenders that will consider this. Alternatively, your assets can be assessed by a private bank, allowing you to use them to get a loan without cashing them in.

Benefit Income

There are many benefits, including tax credits and disability living allowance, available that can supplement your basic income, and some lenders may consider this in your application.

Each mortgage lender will have its own rules and regulations in regard to using benefits during remortgage applications.

Using an experienced broker will help you determine which lenders are open to this and give you a better chance of being accepted. Start online below now and get approved within 24 hours:

Contractor

Contractors looking to remortgage their property will face similar challenges to freelancers. In most cases, contractors will benefit from longer contracts or terms with companies that they will be able to back up with documentation.

Providing contracts, bank statements, and other documentation to show evidence of current and previous work will benefit the application.

Lenders tend to be more likely to accept applications from contractors that are able to show a consistent employment history and contracts with terms left to run.

Apprenticeship Income

Using apprenticeship income is possible, but as it will typically be low, any amount offered by the mortgage provider will be restricted.

Shared ownership options are available that make the application requirements significantly lower.

Another option for people with low or apprenticeship incomes is to apply for a family offset or guarantor mortgage. This is where your family support the application and accepts partial liability.

Bursary Income

Some lenders may consider this if you have an income supplemented by an NHS bursary. You will have to advise the mortgage provider of how long the bursary still has to run, as well as job prospects on completing your training.

Maintenance Income

Regular child maintenance payments can be considered for single-parent mortgages. Providing the lender with evidence of regular payments can be done by using a CMS letter and providing bank statements.

The age of your children and how long child maintenance payments need to be paid for will significantly impact how likely they will be accepted.

Pension Income

Mortgage lenders typically accept private, state and company pensions during remortgage applications.

The lender will carry out an affordability check, and as long as pension income allows you to make your monthly mortgage payments comfortably, many lenders will be happy to help.

In some cases, self-invested personal pensions (SIPP) and drawdown pensions might not be accepted. However, this will be down to the individual lenders’ rules and regulations.

Age will also be a factor for anyone of pension age that is remortgaging their property. Lenders may have age limits for who can apply or for when the mortgage is to be paid.

There are no specified rules regarding age limits and mortgages, so you can speak to individual lenders or get in touch with an experienced broker who can advise further on who to approach.

Income Not Accepted by Lenders for remortgaging

There are some types of income that lenders will not accept for remortgage applications.

If you make most of your income from professional gambling, you may struggle to find a lender accepting your remortgage application.

Cash-in-hand salaries may also limit the options you have when it comes to remortgaging.

Lenders will try to assess the risk of each application, and proving you get a documented income is nearly always essential.

In some cases, specialist lenders may consider the income that mainstream lenders would not accept.

If you find you are struggling to find a mortgage provider because of your income, speaking with a broker with in-depth knowledge of the market can help.

Contact Loan Corp Today for Expert remortgage advice based on your specific income

If you have non-standard or complex personal income that makes it difficult to find mortgage providers willing to consider your application, speaking with experienced mortgage brokers can help you locate specialist lenders.

Most mortgage lenders will check to ensure your basic pay is enough to cover monthly repayments after living costs are taken from it. Low-income, zero-hours contract and self-employed applicants may find it difficult to obtain a new mortgage.

At Loan Corp, our experienced brokers have years of experience, access to state-of-the-art systems, and the ability to check with hundreds of providers to ensure we can find you the perfect lender and interest rate for your needs.

We will provide expert mortgage advice to help you prepare your finances and paperwork for applications and improve your chances of being accepted.

If you are struggling to find remortgage lenders because of self-employment or any other reasons mentioned above, call us today on 0808 301 9509.

Alternatively, you can use our handy online form by filling out a few essential details about your enquiry, and we will get back to you as soon as possible.

FAQs

What is a trust income mortgage?

A trust fund income mortgage allows the borrower to get a mortgage based on the income they receive from a trust.

The trust can be the main source of income or secondary, depending on the lender, and trusts that are typically accepted include;

• Bare Trust
• Discretionary Trust
• Accumulation Trust
• Non-resident Trust
• Mixed Trust

It is possible that lenders may only consider some of the trust income or may not consider it at all.

Why is it more difficult to remortgage with different income types?

Mortgage lenders assess potential borrowers based on the amount they want to loan, the equity available in their property, and their perceived ability to afford mortgage repayments.

To carry out affordability checks, lenders need proof of income and may check your deposit and credit history.

This form of risk assessment allows them to weigh up the risk of lending to applicants and minimises the risk of people getting into financial difficulty over time.

Will I need a specialist lender if I am self-employed?

You won’t necessarily require a specialist lender if you are self-employed. As long as you can provide a tax year overview, your total income, and any other documentation, including contracts that show your ability to earn a steady income, many lenders will consider your application.

In some cases, specialist lenders might offer better rates or deals. This is why you should explore your options before agreeing to a deal.

Loan Corp can help you explore all the best available options to ensure you get the most suitable deal for your circumstances, meet minimum income requirements, and can meet your monthly payment comfortably.

Final Thoughts

If you are trying to remortgage your property, there are many factors that lenders will consider, including your age, employment, the property’s remaining equity, and income.

As you can see from the examples provided above, different income types may face different challenges during the mortgage application process. Whether you rely on rental income, disability benefits, tax credits and other government benefits, have a relatively low salary, or are self-employed, it can be challenging to find suitable lenders.

Loan Corp specialises in providing expert mortgage advice and brokerage services to anyone looking to remortgage.

Our years of experience allow us to quickly and efficiently search the market for suitable lenders that can provide you with competitive rates, helping you find peace of mind and saving you money.

Get started online and get approved for a remortgage in just 24 hours: