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Can I Invest my pension in property?

By Mike Holt

The Landlords Pension have helped over 1,000 company directors and property investors take control of their pensions and invest them into property in various ways.

At The Landlords Pension we speak to property investors all over the country who are at various stages of their property journey. One thing we find is the fact that the vast majority of these people took the decision to invest in property as a way to ensure that they had sufficient funds available to enjoy their retirement when the time came. This is a recurring theme and most would prefer to be sooner rather than later.

Many of our clients have or had successful careers in the corporate world and enjoyed benefits such as company pensions or personal pension schemes hoping that either or both of these would produce the income desired in retirement.

In reality and on further inspection, it soon became apparent to them that what they had in place would not produce the results that they had hoped. Hence the decision to take action and invest in property to ensure they would indeed have the means to retire in the manner they desired.

What is a concern is one of the main drivers for their decision to invest in property (their existing or frozen pension funds) is retained and not utilised to invest in property or grow their business. There may be a few reasons for this.

Firstly, some people are not aware they can take control of their company or personal pensions and make the decisions on where these are invested themselves. Secondly, some wrongly believe they have to be 55 or over to take control of these funds; finally, that it is difficult and expensive to take this course of action, which is simply not the case.

If you are a company director, you can take control of your pension funds at any age and move these into a pension scheme over which they have the control and flexibility to invest in property in one way, shape or form.

A Small Self – Administered Scheme (SSAS) pension allows the individual to directly purchase commercial property or land through the pension.

Even allowing the ability to leverage the pension funds to increase purchasing power. You can make a loan from your pension fund to your company to grow your business or increase your property portfolio. You have a greater choice of investment options including the ability to invest in a completely hands-off property bond which offers a fixed return/fixed term investment with the security of a 1st legal charge over physical property.

Ultimately if you are a company director who wishes to take control of existing or frozen pension(s) which will give you the ability to grow your business and/or invest in property, then there is a very straightforward, cost-effective way in which you can achieve this at any age.  

To find out if you qualify for a Property SSAS pension you can take our 60-second eligibility test here: https://www.thelandlordspension.co.uk/test

Or download our Free Property SSAS guide here: https://www.thelandlordspension.co.uk/freedownload

Mike Holt

The UK Buy to let market is undergoing a sea change.

Dominic’s team kindly sent us the following article. Which explains what we can expect from his talk at the next SWPM in relation to current property news.

The UK Buy to let market is undergoing a sea change.

Regulatory and taxation changes have altered the market dynamic. Reducing its attractiveness to amateur landlords, and increasing the tax bills of higher-rate investors. In spite of rising costs, there are still healthy returns to be found in property for professional investors. However, it is now a long-term business endeavour, requiring commitment and expertise.

Investors must be prepared to undertake business and tax planning, understand the risks as well as the rewards, and the responsibilities they have towards their tenants.

More than ever brokers and their clients are turning towards specialist lenders such as Kent Reliance to help them navigate this increasingly complex world.

At the next South Wales Property Meet, Dominic Sheahan from Kent Reliance will provide insight into the dynamics currently affecting the  Buy to let market, and outline successful strategies for mortgage finance.

Dominic Sheahan from Kent Reliance at the next South Wales Property Meet

On the 16th of May, Dominic Sheahan will be speaking at the South Wales Property Meet. One of Harvey Bowes associated business which organizes networking events every month in Newport, South Wales.

We all hope to see you there https://www.eventbrite.co.uk/e/south-wales-property-meet-may-2018-tickets-4266712050

 

Shawbrook announce Spring discounts

Shawbook Bank have announced a special discount of 0.25% to their arrangement fees during the Spring season. The discount applies from 1st to 31st March and for existing borrowers of the bank, this is in addition to their loyalty discount – making their range of specialist BTL mortgages an excellent offer.

The bank take a practical approach to underwriting, with an impressive range of products specifically designed with professional property investors in mind. To find out more about what Shawbrook have to offer, contact the Harvey Bowes today on 029 2175 4150

Why do the vast majority of borrowers choose to use a Mortgage Broker?

Three fifths of mortgage business (82%) now goes through intermediaries (brokers) whilst the buy-to-let sector has grown by 49% year-on-year, according to the 2016 Mortgage Efficiency Survey conducted by IRESS.

The research indicates that intermediaries continue to dominate the mortgage market with more than three quarters of sales going through this channel.

Why are so many homeowners and property investors using Mortgage Brokers to obtain property finance?

“Simply put, since the credit crunch, the criteria of lenders has become incredibly diverse. What works with one lender may not work with another and in correlation with that, an applicants circumstances may be acceptable to one lender but not to another. As a result it is not a case of comparing the market and identifying the right deal by interest rate or by product fees, there are many different considerations and it takes a professional to assess properly” states Howard Bowes, Managing Director of Harvey Bowes Limited.

Using a professional to advise on, or carry out, specialist tasks is certainly not new. Technically a person could do their own conveyancing (although this would not be acceptable where mortgage finance was involved) however, the vast majority of property transactions are transacted via a solicitor. And when it comes to business, the figures are looked after by an accountant. So when it comes to a serious purchase like a property, whether it is a persons own home or an investment, should it really be a surprise that a broker would add value?

Very often, it is not just the advice that makes the difference. Not only can a broker find the right deal and explain why they make a specific recommendation. But also, a good broker will often liaise with the solicitors and estate agents, acting as the go-between in keeping the deal alive and communication flowing.

With property investors, the property is being purchased at a keen price or may hold opportunity to add value and may therefore be attractive to other investors. Or perhaps it is a motivated seller who wants certainty and speed. This is another key area where brokers can help. With their finger on the pulse, knowing which lenders are performing fast and showing real hunger to lend, a broker can identify and inform a property investor of which lenders are most likely to deliver in the required timeframes. This can be critical in making a deal work.

Combined with managing the process, this can save time on getting mortgage applications through to offer and completion. A broker should be able to process documents accurately and swiftly and use their knowledge to make sure the process is as swift as the lender can manage. This often becomes more difficult with smaller broker firms where there is no real administration support, however, professional brokers are set up to deliver with speed and deftness.

Shawbrook’s New to the Pride

Shawbrook Commercial heads to South Wales to introduce the latest Strategic Broker Partner to join their Pride – Harvey Bowes.

Howard Bowes, Managing Director of Harvey Bowes had the following to say on joining Shawbrook’s Strategic Panel:

“Harvey Bowes offer our clients finance options from a wide range of lenders and we don’t favour any particular financial institutions, instead striving to provide the best deal possible for our clients.

“Although our client base covers a broad range, our niche specialist area is working with property investors. Whether investors are looking for residential investments, HMO’s, short term refurbishment & sale or developments, our experienced team of professionals will be on hand to assist in finding the right finance package. Everyone involved at Harvey Bowes always strives to offer great advice, and we find this level of service reflected from the bottom-up by Shawbrook’s dedicated lending teams. Across both Residential and Commercial business areas, they have a range of carefully selected underwriters who are competent, personable and able to work in tandem with our staff to deliver a premium level of service to the borrower.

“The mortgage market has changed significantly of late, and will continue to evolve. Shawbrook has always been at the forefront of staying relevant and competitive ever since we started working with them. There are regular product enhancements which are clearly communicated to everyone on their broker panel, ourselves included. We always feel in the loop and there’s a real sense of a two-way relationship with the Shawbrook teams, built on a mutual respect.

“They go to a great deal of effort to listen to what brokers like us are saying and then act accordingly. A recent example would be them launching the E-AIP online application system for Residential and Commercial cases. This saves us time and has resulted in us receiving numerous instant IMOs (Indicative Mortgage Offers) which we can go back to our clients with – truly outstanding service.

“There’s a lot more to be said about the service Shawbrook provides but, in a nutshell, they are a lender that listens closely and leads by example in the commercial mortgages market. It’s a pleasure to work with them and I look forward to many more of Harvey Bowes’ clients benefitting from their pragmatic approach to lending.”

Gavin Seaholme, Regional Development Manager of the South Central region for Shawbrook Commercial added:

“I’ve been acting as Shawbrook’s field sales representative for Harvey Bowes for a couple of years now. During that time, we have nurtured a close working relationship which has resulted in many of their clients becoming Shawbrook Bank customers.

“They have proven during that time to be one of the most tenacious and knowledgeable Broker Partners we have on our panel. They richly deserve their new status as a Strategic Partner of the Bank, and I look forward to providing further positive outcomes for their clients in the future.”

To contact Harvey Bowes about your mortgage requirements, call 029 2175 4150 today.

Harvey Bowes – shortlisted in the Specialist Finance Introducer Awards

Harvey Bowes has been shortlisted as one of three nominees for the 2016 Specialist Finance Introducer Awards, presented by Mortgage Introducer, for the category of Best Commercial Broker.

sfi-awards

The award nomination comes just weeks after Shawbrook Bank appointed Harvey Bowes Strategic Partner status, citing the quality of mortgage applications and ability to swiftly move from application to a position of completion as key reasons for the appointment.

“Our continued success is due to our commitment to both our clients and the banks with whom we work. Forging strong alliances with the key banks who provide finance for property investors in addition to delivering excellent advice and service to the property investor community is precisely why we have earned a reputation as the ‘go to’ niche broker in this market” – Howard Bowes, Managing Director, Harvey Bowes Limited.

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Howard Bowes, Managing Director and Jonathan Holland, Senior Case Manager, Harvey Bowes Limited.

Contact Harvey Bowes today on 029 2175 4150.

Brexit: Opportunity or Disaster?

brexit graphic

BREXIT: OPPORTUNITY OR DISASTER? – by James Siddall, Harvey Bowes Limited.

Given the media maelstrom surrounding Brexit, we at Harvey Bowes believe it to be an opportunity that should not be missed. We do not share the view of the media that the economy will grind to a halt following Brexit. Given the figures from a variety of sources detailed, our view is that Brexit will strengthen the UK economy.

The economic numbers here present an economy in good health a mere 7 years after the greatest financial crisis since the Great Depression. The UK grew 2% in 2015 and is set to grow by 3% in 2016 so an increase of 15 on Year on Year basis. This is against a strong background of consumer spending. Retail sales grew 4.3% on a YoY basis in 2016 with wages growing 2.3%. This combined with low interest rates (0.5%) and high Quantitative Easing policy employed by the Bank of England represents a strong economy. The strong economy can be further highlighted by a 4.9% unemployment rate. The key figure here is mortgage acceptances having increased by 4,000 p.a. from 67,000 in 2015 to 71,000 in 2016. It highlights that banks are still willing to lend on property and businesses giving a major boost to investors who have become concerned that banks will restrict lending as a result of Brexit. Given Harvey Bowes’ position as one of the top mortgage brokers with major banks, we have been informed that the banks are still willing to lend and have adopted the approach of ‘business as usual’. In light of these figures, it suggests that, despite the capital market volatility and slowdown in short term growth, the UK economy is in a stable position.

Against this background, we believe that property will continue to be the asymmetric return asset class to counterbalance the capital market volatility. Despite the Equity market surge where the FTSE100 has risen from 5,800 (Brexit vote) to 6,700 (22/07/2016) and Fixed Income markets suffering extreme volatility with yields being pushed down (10Y UK gilt yields 0.83%) to the detriment of prices, we believe that property will be the asset class that will provide stable capital gain in these times. Data from LendInvest suggests that the average rental yield for BTL property in the UK is 5% with Capital gains ranging from -3.7% to 13.8% in the North to London with the ROI complimenting these capital gains ranging from 1.2% to 18.9%. These figures suggest a healthy growing property market against a backdrop of strong economic figures. Furthermore, research undertaken by Cushman and Wakefield suggests that within the Commercial property market the UK market is forecast to grow significantly. Within the office rental area, the UK is set to grow by 3% in 2016. In addition, London was in the top quarter with 4.7% rental growth for offices in 2016. The capital value for the high street growth figure also backs up our view that Brexit is an opportunity for property investors. The high street capital value for London grew by 15% in Q1 2016. These forecasts highlight our view that Brexit will be an economic success for Britain.

Given our network with the major banks, we have followed their lead and maintained a business as usual approach. Indeed, we have seen an increase in mortgage applications from our current clients who are major property investors throughout the UK. Moreover, we have seen a 5% rise in applications from new clients further highlighting the position that we took after Brexit that both retail and professional investors will seek yield in property.

BoE holds the interest rate at 0.5%

Despite speculation that the Bank of England may reduce the interest rate, the Monetary Policy Committee (MPC) voted 8-1 for the rate to remain at 0.5%.

Bank of EnglandFinancial markets had priced in an 80% chance of a rate reduction. The Sterling rose against the Dollar after this news.

The rate has remained at 0.5% since March 2009 and this is the longest period it has remained unchanged.

 

The final Cardiff pin with Howard Bowes as Host

For almost 3 1/2 years Howard has run the Cardiff pin meeting along side a very loyal and hard working team. Howard decided to stand down as Host after the July 2016 meeting. Because pin breaks for the Summer and does not meet again until September, this is an ideal time to implement change with minimum impact.

The Cardiff pin meeting is a group of Property Investors who meet on a monthly basis to rub shoulders with like minded people and be educated by expert speakers who travel from all corners of the UK to share their expertise.

Howard Bowes is also the Managing Director of Harvey Bowes Limited – an award winning mortgage brokerage that specialises in helping property investors fund their projects. Standing down from Cardiff pin will allow Howard to focus his attention on the day to day management of Harvey Bowes Ltd., his own property investments and of course his own independent property meeting held at the Celtic Manor – the South Wales Property Meet.

Further information on the South Wales Property Meet can be found at www.southwalespropertymeet.co.uk and further information on Harvey Bowes Ltd can be found at www.harveybowes.com

Property – Momentum Investing to recycle cash invested

Momentum Investing

Property investing is an expensive game. Regardless of how big one’s pot of gold might be, eventually, it will run out. The average price of a property in the UK according to Nationwide in July 2016 was £206,145 – if you take a more traditional 75% loan to value buy to let mortgage, that means one would need £51600 plus purchase expenses on average to buy. And then there is the prospect of buying something that needs work – perhaps the price is below the average, but a deposit and funds to carry works are needed.

It is easy to see therefore, why so many investors are turning to innovative ways to purchase and refinance their investment property. And with more lenders entering the residential investment market place, it is easier to refinance a BTL property within six months. Even though many vanilla lenders such as TMW and BM Solutions strictly apply a six month rule; meaning that they will not accept remortgage or further advance applications until six months ownership of the investment property has passed, a host of lenders understand that there are good reasons for a property investor to want to remortgage within that time frame and they allow it.

Important to note however, that this does not apply where a property has been bought below market value (BMV), in fact lenders are cautious of this type of transaction. The formula we speak of for momentum investing is designed around adding value to a property and then refinancing instead of looking at a pure BMV model.

In the video above, Howard Bowes, Managing Director of Harvey Bowes Limited, award winning mortgage brokers specialising in working with property investors, gives some top tips from the momentum investing formula.

For further information, call Howard or one of the team at Harvey Bowes on 029 2175 4150

YOUR PROPERTY MAYBE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Brexit – how will it impact property investors

Brexit – what impact is it likely to have for property investors?

At the July 2016 Cardiff pin meeting, Howard Bowes will discuss the likely impact of Brexit, including the market place in general and the way bank and crowd funding is likely to develop in the short and medium term.

This will be followed by Michelle Kennedy who will present her experience and success as a property investor. Michelle will share her story of how she built a £60,000 per annum income from property from a standing start in two years.

To book on to the Cardin meeting, go to http://www.cardiffpin.co.uk and if you are booking for the first time, select the option to say you have a voucher code and enter my surname “BOWES” to reserve your place at the meeting free of charge.

If you have any questions about the meeting, please contact me, the host of Cardiff pin, Howard Bowes on 029 2175 4150.

Gifted deposits – a real solution for First Time Buyers

rfirst time buyer mortgagesBuilder Gifted Deposits & Vendor Gifted Deposits

There are a range of schemes available to assist someone purchase a home. Many of the UK’s leading developers offer ‘Builder Gifted Deposits’, sometimes advertised as ‘5% deposit paid’. Somewhat less known about is the option to purchase properties with a ’Vendor Gifted Deposit’.

Builder Gifted Deposit

Many of the leading UK developers offer Builder Gifts or a percentage of the deposit paid by the developer. Some also offer ’Deposit Match’ whereby for example the person buying the property comes up with 5% of the deposit, the developer gives another 5% and there is a mortgage put in place to pay the remaining 90%.

How does this actually work? It can take a little thought to grasp the concept, however, it is actually incredibly simple. To use easy figures, lets say a property is worth £100,000 and is being advertised at £100,000 sale price with a ’Builder Gifted Deposit’ of 5%. This means that in reality the developer is proposing that the property is worth £100,000 on the open market, however, they are willing to sell for £95,000. The contracts are drawn up for a sale at £100,000 with a declared deposit contribution from the builder or seller. This does not mean that the vendor physically pays 5%, they in effect create a voucher for the 5% off. The solicitor checks that the paperwork is legal and correct and they will also check that the lender is fully aware of the structure of the deal and that there is an incentive offered.

Vendor Gifted Deposits

Vendor gifted deposits work in a very similar way to builder gifted deposits, the primary difference being the seller! Rather than being the developer or builder who has built the property it is an older property being sold by the current owner who is not a builder or developer. The principle of how it works remains the same as the builder gifted option. Lenders do approach Vendor Gifts with more caution than Builder Gifts and while this was a popular option pre-credit crunch it is not currently suppoerted by lenders.

Family Gifted Deposits

It is not at all unusual for family members help others in the family get on the property ladder. Family gifted deposits are approached in two main ways. The first is a gift of a sum of money towards a purchase of a property which can be used as all or some of the deposit required by the lender. The other alternative is that the property is being sold by one family to another at a discount and that discount provides part or all of the deposit required so that the family do not actually part with any money either way and the mortgage lender funds the purchase. It is again important to make sure that the gift is declared to the lender at the out set of the application. It is normal for the Mortgage Lender to ask for a letter from the person giving the gift to confirm any conditions of the gift and whether it includes any legal interest in the property by the person giving the gift.

Landlord Gifted Deposit

As a tenant, your landlord may decide to sell the property you rent. It is quite likely that if he/she does so, they would offer you, the tenant, the property at a discounted price rather than pay an Estate Agent fees and wait for a buyer on the open market. Again, any discount offered can be used as all or part of the deposit required to get a mortgage and purchase the property.

Call us on: 029 2115 6918

Think carefully before securing other debt against your home. Your home may be

repossessed if you do not keep up repayments on your mortgage

Where you only place a small deposit on a property you should be aware that you

may enter into negative equity as the value of property can up or down

Mortgages for non standard construction properties

There are mortgages available for many different types of property construction. Anything from wooden homes, prefabricated homes, concrete Reema homes and more are acceptable to certain lenders. However, it must be said that certain types of construction are not mortgagable with the high street lenders.

conctrete home mortgage broker cardiff south walesReema PRC Concrete Property

Reema properties come in two basic grades. The type is known as “Hollow Panel” and is normally only available if the property has been renovated and has a guarantee to establish that it has taken place. Normally the local council will have a record of this even if the owner does not have a guarantee or certificate available. Where no renovation has taken place, it may still be possible to secure a loan up to 60% of the property value if the property is being purchased for commercial purposes, such as Buy To Let.

The alternative type of Reema “Conclad”, is normally suitable for many of the high street lenders to lend on, subject to general conditions in very much the same way as a standard brick and tile construction property.

If you are looking for a purchase mortgage on a non-standard property construction or a remortgage for a non-standard property.

Mortgages available for:

  • Reema PRC Conclad concrete construction properties
  • Reema PRC Hollow Panel concrete construction properties
  • Thatched roof properties
  • Mineral Fibre Mechanically Fixed properties

Thatched roof properties

Although thatched roof properties are often subject to an increased premium for home insurance, there is a good selection of high street and specialist lenders who will consider lending on standard terms. If you are looking to purchase a property with a thatched roof, your lender may require a more in-depth valuation than the standard valuation for mortgage purposes. If the property is in good order and the are details available of when the roof was last inspected or re-furbished it is advisable to provide the information and any documentation to your mortgage broker in advance.

Wooden Homes

Referring to complete wooden homes and not timber-framed construction, these often do not retain the same value as standard construction. More commonly used as holiday homes or temporary residence, a wooden home is more difficult to use a security for lending.

Prefabricated Construction

prefab steel home mortgagesEssentially prefabricated homes fall into two broad categories:

1) those mostly intended as temporary homes after World War 2, yet many still remain. It is possible to obtain a mortgage on such a property for Buy to Let purposes, however, the property must be in good condition overall and entirely habitable.

2) Modern, state of the art energy efficient prefab homes. There is a reasonable range of mortgage lenders who will consider lending on this type of property. Tale to Harvey Bowes today to find out more on 02921754150.

Properties less than 10 years oldprefab-home-mortgages-harvey-bowes-mortgage-broker

Where a property has been built within the last 10 years, a lender will normally require some sort of guarantee. Traditionally there are a number of schemes, most commonly known is possibly the NHBC or LABC. Although not issuing new guarantees, the Zurich guarantee was also widely used at one point and a home could still be under an existing Zurich guarantee. However, it is not limited to these well-known schemes. Many self-build properties, or those sold by smaller developers, they may not have this type of guarantee offered with the property. This in itself does not make the property un-mortgageable with a high street lender. However, they will require certification that the property was constructed to a certain acceptable standard; and would, therefore, ask for an Architects guarantee from a suitably qualified Architect or Building Contractor. If you are buying a property which has been built within the last 10 years and none of the aforementioned is available, think carefully about making this purchase. Not only could the property be of unsound construction, but the resale value, if you wanted to move on, would undoubtedly be restricted.

Barn Conversions

Normally, where a barn conversion has been completed within 10 years, the lender will still require some form of building guarantee, such as NHBC or LABC. Alternatively, a RICS or similar report by a qualified building inspector or engineer will also be suitable. It is important under these circumstances to find out exactly what documentation there is to support the conversion before submitting a mortgage application to the lender, as the requirements vary. However, provided the quality of the conversion has been signed off by a suitably qualified surveyor or has a recognised building guarantee, there is a wide range of lenders who will accept an application based on the property type..

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Your home may be repossessed if you do not keep up repayments on your mortgage

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Are Concrete Houses Un-Mortgageable?

A very common question, and indeed a misconception amongst the public is that ‘all concrete houses are un-mortgageable’ . The simple answer is that this is incorrect! Council right to buy mortgage broker cardiffThere is a very wide variety of concrete construction properties, all with individual merits, coupled with an ever increasing broad spectrum of open minded lenders. You will find these houses in many different forms, known differing  terms – most were built post war, as there was a massive demand for fast construction and pre-cast reinforced concrete construction was introduced.

The common problems with concrete construction that is not limited just to houses, but also commercial buildings, structures, bridges etc is commonly known as concrete cancer – this is where the steel reinforcements begin to corrode and expand, causing the structure to crack and degrade. Please check each property individually, as many have had remedial work and refurbishment to eradicate the associated problems.

If considering a purchase or financing of a concrete or ‘non traditional’ construction property, the key is information and education. Firstly gather as much information conctrete home mortgage broker cardiff south walesabout the property as you can. This can be from the selling agents, the vendors, the neighbours, the library, local builders and trades people, the local authority and of course the internet. Use these to educate yourself as to the pro’s and con’s of this particular property and indeed consult a professional surveyor or conveyancer for opinion as to potential problems. Once you have these facts, you can use them to establish the feasibility of sourcing a suitable mortgage. The mortgage market has changed drastically of late and is consistently evolving. What may be unfit yesterday, could fit today – parameters and criteria are constantly being adjusted.

A very important factor that may influence the value and onward saleability of a property is the ability to obtain a mortgage secured against it. This is where an experienced whole of market broker could be invaluable. If the general consensus is that the property is ‘unmortgageable’, this will have a massive effect upon the current and residual value. However if by using a broker that can access every lender available in the UK, you can secure funding, you have achieved two things; 1) a property that will benefit from capital appreciation and will have no re-sale issues, 2) A potentially great value buying price due to the lack of interest from word on the street about the availability of financing.

At Harvey Bowes we believe in going the extra mile to ensure we can give maximum service in cases like these – please call us for further information: 029 2067 6716

YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

ben hollingsworth harvey bowes mortgagesThis article has been published by Ben Hollingsworth, Commercial Director of Harvey Bowes Limited. To find out more about the team at Harvey Bowes, please visit the following link: http://harveybowes.com/?page_id=41625

You can find out more about Harvey Bowes, mortgage broker Cardiff by vising our main website at www.harveybowes.com

Harvey Bowes Limited | Mortgage Broker Cardiff | 029 2067 6716

SA302 form from HMRC – how to get one if you are self employed and applying for a mortgage

More and more lenders are asking to see a copy of the HMRC SA302 forms covering the past two or three years of tax submissions. In this post we cover why they are asking for these forms and how to get them. But before we get to these two points, what is it? The SA302 is a response from HMRC. Once you have submitted accounts, HMRC respond with a SA302 form which states how much tax you owe or have overpaid by. In most circumstances, we have found that applicants cannot provide this form when requested and a copy has to be ordered from HMRC.

Why are lenders asking for this form?

The SA302 is a brief summary of the income that has been reported to HMRC and the tax that is due as a result. Therefore, this form as issued by HMRC is an irrefutable certificate that documents exactly how much income is declared. From our experience, if you use a reputable accountancy practise with Chartered qualifications, lender are less likely to make this additional request.

Lenders are more vigorous than ever in stamping out mortgage fraud. Declaring a higher income than one submits to HMRC is mortgage fraud. The SA302 is an accurate way to ensure the income declared on a mortgage application is correct. Our advice for any owner of a small business, or self employed person, is to order a copy of this form right at the start of a mortgage application and it is therefore ready if the lender subsequently requests it.

How to get the SA302 form from HMRC

In some circumstances your Accountant may have it on file, or you may have retained a copy when sent from HMRC. However, in the vast majority of situations we find that a copy needs to be ordered from HMRC.

A little tip before you call; make sure you have plenty of time and patience. The lines are frequently busy and you may experience being on hold for some considerable time. Our record to date is 24 minutes.

Have ready:

The Full Name of the person you want the SA302’s for (easy if it’s you)

Full current Address

Date of birth

10 digit individual tax code

National Insurance number (not essential if you have the 10 digit code above, but we like to have both)

Remember:

Be sure which tax years you need; we would recommend you request the last three tax years with the most recent ending not more than 18 months ago – that will satisfy most Lenders.

Unless you are the tax payer the HRMC agent will not discuss detail with you. So be sure returns have been filed for the years figures you need.

HMRC will post the SA302’s only to the registered address. Their post is very slow and while they quote 7 to 10 days, we have found it takes more than 30 most situations to date. This is the reason why we recommend ordering it straight away rather than wait for a lender to potentially request it.

You can ask HMRC to fax the document to you, or directly to your broker or accountant – but always ask for it to be posted as your broker will usually be required to certify that they have seen the original. So although a faxed copy can be used to confirm figures and give some documentation to work from – an original will be required.

The SA302 phone number is 0845 900 0444

If your mortgage is being arranged by Harvey Bowes Limited, please ensure you ask for it to be faxed to 029 20 020 495 – from our experience we receive a fax copy within 3 hours of request. So we can get to work with the fax copy provided it is directly from HMRC provided we have confirmation the original will follow in the post.

One more note on getting a copy ‘post haste’

If you tell HMRC it is needed for a mortgage application and ask for the copy to be faxed urgently, they will do it much more quickly than otherwise. Don’t think you are on your own asking for this. It is a daily occurance for HMRC and the people who ask in the right way and take a moment to explain why will find they really can be helpful!

Did you know?

There are lenders offering mortgages to the self-employed and business owners based on the latest one year’s accounts or SA302 only – so if you have had a better trading profit in the last tax year, they will base the application on that instead of the more popular average of two or three years which is the case with many lenders.

If you require further advice on mortgages for the self employed or business owners, please contact Harvey Bowes on 02920 676716

Think carefully before securing other debts against your home. Your home may be
repossessed if you do not keep up repayments on your mortgage

Is any politician brave enough to press the Brexit button

There are plenty of reports that on the run-up to the referendum David Cameron stated he would be submitted the Article 50 formal withdrawal from the EU straight away of the result was to leave. However, after the result he resigned and announced that his successor would be the person to administer the notice.

As leader of the ‘leave’ campaign, Boris Johnson was also prominently eligible as leader of the conservative party should Cameron step down. And should Johnson run for leader of the conservative party he would have to submit the Brexit Article 50 notice – afterall, he lead the campaign. The press would have a field day if he did not.

So Johnson’s answer to this conundrum? Decline to run for the position as the next Prime Minister and not be in the position to submit Article 50. Not the finest career move we’ve seen in British Politics.

The question, is, will the next PM have the bottle to follow through on the referendum?

Boris Johnson

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