The Client
Two brothers applying jointly for a Right to Buy mortgage. One brother has learning difficulties and receives benefits income. The other is his registered carer, receiving income through direct payments for that caring role, and is also self-employed, running his own business for the previous 12 months. Both brothers have historic adverse credit on their files.
The Objective
To purchase their council property under the Right to Buy scheme, using a combination of benefits income, carer’s direct payments, and self-employed income, despite a short self-employment track record and past credit issues on both applications.
The Situation
Early on, things looked manageable. The benefits income and the direct payments for caring duties were enough to satisfy affordability, and the lender was willing to look past the brothers’ past credit issues instead of using them to shut the application down.
The Challenge
The Right to Buy paperwork from the council changed the picture. It included a required allowance for home improvements to the property, and the lender wanted this amount added to the loan. Once that additional borrowing was factored in, the mortgage was no longer affordable on the figures originally submitted.
Compounding the problem, the self-employed brother had only been trading for 12 months. The income shown on his tax computations for that first year was not enough on its own to support the larger loan now required.
What We Did
We found a lender prepared to base the assessment on projected income for the coming year, not just the figures already sitting on the first year’s tax computations. That meant bringing the client’s accountant in to produce a formal Accountant’s Certificate, projecting the year ahead and setting out why that figure sat above what the business had shown previously.
The Solution
The lender accepted the projected income figures, supported by the accountant’s certificate and explanation. That additional income, combined with the benefits and direct payments already in the case, brought the loan back within affordable limits, improvement costs included.
The Outcome
The mortgage was approved and the brothers completed their Right to Buy purchase, securing ownership of the home with the necessary improvement works funded as part of the loan.
Conclusion
Right to Buy applications can unravel partway through once the council’s own paperwork adds costs nobody budgeted for at the outset. Getting a case like this over the line took a lender genuinely prepared to weigh benefits income, a carer’s direct payments, past credit problems, and projected earnings from a business barely a year old – all at once, rather than picking off one issue and declining on the next. As a whole-of-market broker with over 300 lenders on our panel, that’s exactly the kind of case we’re built to place, where a single high street application would have stalled at the first income type.
Frequently Asked Questions
Can I get a Right to Buy mortgage using benefits income?
Yes. A number of lenders will factor certain benefits into a Right to Buy application, though eligible benefit types and how they’re weighed differ from lender to lender. Working with a whole-of-market broker means we can point you toward panel members set up to work with your particular income makeup.
Will a lender use projected income if my business is less than two years old?
It happens, though it’s not the norm. A handful of specialist lenders will work from projected figures backed by an Accountant’s Certificate, particularly in cases where last year’s numbers don’t reflect how the business is actually performing now.
Does historic adverse credit rule out a Right to Buy mortgage?
Not necessarily. Certain lenders will take a view on historic adverse credit rather than declining automatically, particularly where the more recent credit conduct is clean and the rest of the application is strong.
Does Right to Buy include the cost of home improvements in the mortgage?
Sometimes. If the council’s Right to Buy documentation flags required improvement work, certain lenders will fold that cost into the mortgage itself – though it pushes up the loan size, which has knock-on effects for what the case can afford overall.
Final Thoughts
UK Mortgage Broker is a whole-of-market broker helping clients throughout the UK and globally to secure funding on UK property. We are directly authorised and regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage.
Call: 01628 969 500
Email: info@uk-mortgagebroker.co.uk
Related Pages
- Residential Mortgages – whole-of-market advice for main home purchases and Right to Buy applications across the UK.
- Can I Get a Mortgage in the UK? – how deposit, income and credit profile determine eligibility, and what causes most declines.
- How Lenders Actually Check Your Income – how self-employed, contractor and variable income get assessed differently by lender.
- Self-Employed Mortgages – accounts, SA302s and projected income for company directors, sole traders and contractors.
- Buy to Let Mortgages – whole-of-market advice for landlords and property investors across the UK.