Mortgage rules loophole?

Zenify

Hi

I am planning on taking out a mortgage in about 2 years (I know it's a long time away but I'm an early planner). My difficulty will be with the 3.5 times income and not the deposit, I hope to have about a 50% deposit by then).

I have been with my employer for over 2 years and plan to be with them when I apply for a mortgage.

My work isn't a Monday to Friday job and so taking annual leave is complicated and my employer just puts holiday pay straight into wages. However, I have just been letting these build up with my employer. If I wait until I am applying for a mortgage to put these through (Dec 2017) and apply for mortgage in early 2018 my p60 will look a good bit better right?

Will this work or do banks not go by the p60?

I understand mortgage rates may change a little by then but I'm just been careful.

Sleepy

The bank will need 3 months payslips too so if you're going down that route, get your employer to pay the holiday pay over three months.

The banks do have some flexibility in regard to the Central Bank rules and January is the best time to avail of this, the low Loan to Value you'd be looking for would certainly help in this regard but, if I understand the rules correctly their flexibility is limited to 4 times gross salary. It's not unreasonable to think that with an extra two years of experience in your job that you could be due a raise at that point either!

spaceHopper

I wouldn't do it, you'll get approved in principle go sale agreed on a house and then when they look closer at you they could find out your real earnings are lower. Also letting your holidays build up is mad, take them or get get paid for them in the same year, what if your employer went bust?

Save the deposit talk to the bank next year see what they will give you. If it's not enough then talk to your employer and lay it on the line, that they either need to pay you more you you need to find a better paid job. If the hours are unsociable for instance can you get extra allowances from them?

PhoenixParker

We didn't just have to provide payslips for our mortgage, we also needed to provide salary certs, i.e. a signed statement of our annual earnings from our employer. The payslips alone won't be enough to get you around the 3.5 rule.

With a deposit above 50% you should be a good candidate for an exemption.

Since this is a long term plan I wouldn't worry about it just now. The rules may change, you may end up in a better job or with higher pay, the house price may move down, or so far up that it's completely out of your reach. Focus on what you can do now - save for a deposit, put yourself in a position for better employment. You can look at small fiddles when you're ready to buy.

Zenify

Alright, the fact that they might ask for a signed statement from my employer ends that idea.

I am planning on laying it in front of my employer in 2 years too. it's a good job and I like it but i know other employees have struggled with mortgages especially for the fact that we don't have guaranteed hours (but we all usually have far more than we want)

johnnyskeleton

Zenify wrote: »

Hi

I am planning on taking out a mortgage in about 2 years (I know it's a long time away but I'm an early planner). My difficulty will be with the 3.5 times income and not the deposit, I hope to have about a 50% deposit by then).

I have been with my employer for over 2 years and plan to be with them when I apply for a mortgage.

My work isn't a Monday to Friday job and so taking annual leave is complicated and my employer just puts holiday pay straight into wages. However, I have just been letting these build up with my employer. If I wait until I am applying for a mortgage to put these through (Dec 2017) and apply for mortgage in early 2018 my p60 will look a good bit better right?

Will this work or do banks not go by the p60?

I understand mortgage rates may change a little by then but I'm just been careful.

1. Your employer is supposed to give you actual holidays and is not supposed to give payment in lieu. In fact, it is illegal to pay in lieu for sick leave:

CitizensInformation.ie wrote:

It is illegal under the Organisation of Working Time Act, 1997 for an employer to pay an allowance in lieu of the minimum statutory holiday entitlement of an employee unless the employment relationship is terminated. In general, your annual leave is calculated on the basis of hours worked.

http://www.citizensinformation.ie/en/employment/employment_rights_and_conditions/leave_and_holidays/annual_leave_public_holidays.html

2. When you go into a bank, you are supposed to tell them your actual income, and then show them the payslips to prove it. You can't just show them the payslips or P60 and hope that they mistakenly count an additional payment as part of your normal salary. They often require a letter from your employer stating your basic salary before overtime etc.

If you lie to the bank about your income, that's fraud.

spaceHopper

Zenify wrote: »

Alright, the fact that they might ask for a signed statement from my employer ends that idea.

I am planning on laying it in front of my employer in 2 years too. it's a good job and I like it but i know other employees have struggled with mortgages especially for the fact that we don't have guaranteed hours (but we all usually have far more than we want)

Don't wait two years, wait one and even make some noises before. If you wait two and they say no then you'll need to change job so you'll have to wait at least 6 months for probation and the time taken to find it and your notice period
All of that could easily be more than a year!

SarahMollie

Zenify wrote: »

Alright, the fact that they might ask for a signed statement from my employer ends that idea.

They will DEFINITELY ask for this, no might about it.

Zenify

johnnyskeleton wrote: »

1. Your employer is supposed to give you actual holidays and is not supposed to give payment in lieu. In fact, it is illegal to pay in lieu for sick leave:

Thanks for the help, I am aware of the legalities about holiday pay, that was not the issue. If my employer was happy to do it and so was I - I wasn't going to complain.

The_Conductor

Zenify wrote: »

Thanks for the help, I am aware of the legalities about holiday pay, that was not the issue. If my employer was happy to do it and so was I - I wasn't going to complain.

They are not obligated to pay you in lieu of holidays you don't use- they are also not obliged to offer you the opportunity to carry them from one year to the next. If you allow a block of annual leave to build up- you could legitimately be told it was forfeit. Be careful- its not a good idea to make some sort of an agreement to carry leave on a multiyear basis- with an expectation that you can just monetise it down the road.

Aside from it being illegal- what would happen if the company had a bad trading spell and people were being let go. They could offer you leave in lieu of the holidays- but they'd not be obligated to monetise it.........

In addition to all of this- if they do monetise your annual leave- you'll probably pay tax at 48% and possibly as high as 53% on it (depending on your USC rate etc).

Its not a good idea.

Zenify

The_Conductor wrote: »

They are not obligated to pay you in lieu of holidays you don't use- they are also not obliged to offer you the opportunity to carry them from one year to the next. If you allow a block of annual leave to build up- you could legitimately be told it was forfeit. Be careful- its not a good idea to make some sort of an agreement to carry leave on a multiyear basis- with an expectation that you can just monetise it down the road.

Aside from it being illegal- what would happen if the company had a bad trading spell and people were being let go. They could offer you leave in lieu of the holidays- but they'd not be obligated to monetise it.........

In addition to all of this- if they do monetise your annual leave- you'll probably pay tax at 48% and possibly as high as 53% on it (depending on your USC rate etc).

Its not a good idea.

It's in my contract that I cannot carry over holidays from one year to the next (standard thing in most contracts). However, it is the employers responsibility that an employee gets their entitled annual leave so in order for them to inforce this they have to send a letter to the employee forcing them to take their annual leave. (I worked in employment law for a little bit)

I also calculated all the tax issues (worked in that too). But these are way off the question I asked.

I got the the answer from Spacehopper, Sleepy and PhonixParker - Thanks, you guys gave me the answers I needed.