How to Get a Mortgage with Maintenance Income in 6 Steps!

Searching for the right mortgage can be challenging regardless of your circumstances. If you are divorced or separated and you are receiving maintenance as part of your overall income, it presents yet another challenge. You may think it would be impossible to find a lender who would include this income when calculating how much they will lend. However, obtaining a mortgage with maintenance income is possible within the current mortgage market. There are various elements which are worth bearing in mind if you are in this situation. We will cover the most important aspects below. As is the case in most situations ‘would-be’ homeowners will face, lenders each have their own criteria for considering maintenance income. This criterion relates to the type of income received and where it is sourced from. The following three elements are likely to be considered: If the answer is yes to all three of the above questions, there is a far greater chance that the maintenance income will be included when a lender is considering how much it is willing to lend you for a mortgage.  It may surprise you to learn the answer is no. Of course, all scenarios will be different and as we mentioned before, the lenders will have their own criteria to adhere to. There is a chance you may be turned down by one and accepted by another. However, we can illustrate how you may still be approved for a home loan even without court-ordered maintenance in place. One of our clients was recently able to obtain a mortgage for £130,000 based on two sources of income – maintenance income from her ex-husband and tax credits. She received just under £20,000 per annum from her ex-husband, topped up with another £12,000 in benefits and allowances. The income she received from her former husband was not ordered by a court. However, she was able to provide evidence by way of bank statements which indicated that the payments had been regularly received over more than 12 months. She was also able to sell her existing property, which provided a deposit of 30% for somewhere new. Given these figures, the lender was happy to approve her for a mortgage worth £130,000. So, while there was no evidence available, stemming from a court order, our client could prove that the income had been received over the 12-month period via her statements. By providing evidence of this, she was able to satisfy the lender by answering yes to two out of the three questions we listed above. The lender will want to know how long the maintenance is likely to be paid for in the future. For instance, if you have two children who are aged 14 and 15, you may not be considered for a loan based on maintenance income, even if you can prove you have received it regularly for more than a year. This is because maintenance payments usually end when the child reaches their 16th birthday. If the child stays on in full-time education, the upper limit will be 20. As is always the case, the lender will want to assess affordability in the future as well as for today.  Yes, it does, although not with every lender. So, one must approach a lender that looks at this income and includes it within their affordability calculations. Some lenders will use 100% of the income, others 50% – however most lenders simply do not accept it.  Yes, it would with most lenders as they would view this as a regular outgoing in their affordability calculations. The lender, or your broker, will be aware of this payment either from viewing your bank statements, asking you the question or seeing the deduction on your payslip. How they view the amount that you pay and what this means to the amount you can borrow will differ from lender to lender.  Every lender views maintenance income differently. Some accept it gladly, whereas others simply won’t consider it in their affordability calculations. Therefore, it is wise to seek professional advice from a mortgage broker prior to making an application. The Mortgage Broker Limited has extensive experience throughout the mortgage market, advising clients on a range of home loan products and lenders. If you are wondering whether you could get a loan supported by maintenance income, contact us today to find out more.