Lacking a secure income

Grant Bather

June 17, 2006

Adrian Kidd is an IFA at Mint Financial Services

“This situation is extremely risky, as I am sure the clients are aware. A lot of lenders are very wary of people who are about to or have recently changed jobs and going into a totally different field. You cannot get much more far removed then computer engineer to professional gambler.

We have no idea of his history in relation to this new ‘job’ and also no track record for income produced. Even if you went down the self-certification route I think you would have problems with lenders willing to take this case on, but I’m not saying that no one would do it. That may be dependant on the size of the deposit. Certainly I would think a deposit of a minimum of 25 per cent of the purchase price would be advisable before we start tackling the job and income route.

I would also make the clients aware that it can be fraudulant to lie on the application form and that earnings should not be based on ‘hopes’.

This case goes against everything responsible lending should be, and all I can forsee is payment difficulties, defaults and repossession. As a responsible broker, I would strongly advise they gain re-employment in the same field or continue to rent. If they were unhappy with this, I would let them deal with someone who hasn’t got their best interests at heart.”

Tony Catt is director of Tony Catt IFA

“This is a great coincidence of several circumstances changing in short order. The possible property purchase will stand or fall on the level of deposit being put forward by Bill and Jill and the credit history of the couple.

The obvious down side of the application is the fact that Bill has only just changed his occupation, and indeed the nature of his new occupation is also an issue. He will need to build a track record of consistent earnings, probably at least two years. Even then, it will take a leap of faith for a lender to lend money to him as a professional gambler. Bill would struggle to find a lender that will work with him on any self-certification basis.

Presumably, Bill could show a track record of consistent earnings in his previous roles, which would be a comfort factor, but looking forward his income could be quite irregular and therefore lenders will have doubts about the suitability of lending to him.

Jill’s earnings can be taken into full account. Presumably there was no break in her employment and therefore she can show a steady history and expectation of future earnings.

I feel that the lenders would only be willing to take Jill’s income into account at this time and therefore, the borrowing would be limited, probably to a level of around £100,000 depending the individual lender’s affordability calculations.

If they have the deposit to be able to buy with this level of borrowing, they can buy now. Otherwise, they will need to wait until Bill can prove a level of consistent earnings. Bill will always struggle to get lenders to consider lending to someone describing themselves as a professional gambler. Perhaps there is a more ‘lender-friendly’ job description that he could use in the future.”

Jane King is an adviser at

Ash-ridge Asset Management

“Purchasing a property under these circumstances could prove to be a very risky move.

Assuming Jill has no debts, the most she could borrow would be around four times her income of £22,000 and obviously Bills income is not provable, or necessarily realisable. Although a professional gambler has the potential to make money, there is always the potential to lose large amounts and no full status lender would consider a loan that had to rely to some degree on Bills income. Bill and Jill could take advantage of a self-certification mortgage and in this way Bill could note his intended income without the lender requesting proof, however he will still have to note his occupation on any application form and this may prove to be an obstacle.

I would suggest they stay in rented accommodation until Bill has had the opportunity to see whether his new occupation is, in fact, profitable. If not, they have the freedom to downsize on their rented accommodation and Bill could look for more secure employment. They could then reconsider their options in say six months time. I feel that taking on a large debt at this time is too much of a commitment and I am concerned about affordability. Accordingly, I would advise against it based on the information provided.”

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