Subbie Tip #20 – How Working In A Family Business Affects Your Mortgage Application
If you, or someone you know is a CIS subcontractor working for immediate family this is an important piece of advice and worth sharing to save problems for anyone looking for a mortgage.
Not all mortgage applications specifically ask whether you are related to your employer. If they do, it might be easy to think that as a self-employed subcontractor the question doesn’t apply to you but I’m here to tell you it does. This is something I found out the hard way many years ago but was reminded of the other day when a previous client got in touch to ask me to handle his re-mortgage.
I first met this client over ten years ago and when I was still relatively inexperienced, and he was working as a sub-contractor for his Dad’s construction firm. When I submitted the mortgage application I didn’t tell the lender the client was working for immediate family because in my (then) naïve opinion as he was self-employed he was working for himself, so the family connection was irrelevant.
This client has an unusual surname which also happened to be in the name of the business owned by his Dad. It didn’t take long for the mortgage underwriter to check on Companies House to find the name of the owner and cross reference this with the Electoral Role information (yes, they really do check this level of detail sometimes!). To cut a long story short, the underwriter found that my client’s Dad, who he lived with at the time, was also the owner of the company he worked for. This could have led to the mortgage application being rejected but fortunately the underwriter was lenient and accepted that it was my mistake not to have disclosed the relationship. He agreed that if the Dad’s Company Accountant could confirm that my client was, indeed, a Subcontractor and provide an accountants’ reference, he would be happy to approve the case; which, thankfully for my client is what happened in the end.
So, the learning from this is that if you are a CIS Subcontractor and work in your family’s business, be prepared to get a reference from the accountant. They will need to be accredited to a professional body for their reference to be acceptable. The bottom line is that if the application asks if you are related to your employer and you want your CIS income to be considered in a similar way to an employed person, then you have to expect that the mortgage lender will consider you an employee rather than as self-employed so answer the question in the same way and have your evidence at the ready.
If you, or you think someone you know, could benefit from my experience and advice, please get in touch; you can call me on 08000 306705 or drop me an email to: email@example.com
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE