Accounts for mortgage - The Book-keepers Forum (UK)

jillemily · Veteran Member

Accounts for mortgage

BackOfficeGroup · Guru

Jill

This would be down to the accountant as accounts not signed by a recognised person from one of the main bodies will not be accepted.

Hope this helps.

P

adi2402 · Senior Member

Would they not accept copies of his lodged tax returns, backed up by income and expenditure accounts. There is no legal requirement to have an accountant prepare non corporate accounts so this seems a bit of a harsh requirement.

No really dealt with accounts not produced by an accountant so interested to know the outcome.

BackOfficeGroup · Guru

the only way to get round it is to have a 'nice and friendly' broker who can find you the deals that do not require this but given the past couple of years, I would imagine thats harder than before!

there are still self cert stuff around but you need to know who to go to and it costs!!!

P

Shamus · Forum Moderator & Expert

Good advice above but just to add more caution to this.

If you provide the documentation upon the basis of which a loan is granted you can be held liable for the debt by the provider of finance should the information in the documents prove to be untrue or incomplete.

There is a one liner that I don't have to hand at the moment but it goes along the lines of the documents being prepared only for the intended addressee's and not to be relied upon by third parties.

Of course that annuls their use to the bank for the mortgage!

The case law on this was RBS vs Bannerman, Johnson, Macklay and others (2002)..

Considering the above, especially why the accounts are needed and also the fact that production of the accounts is really the realm of accountants then if bank reports are insufficient for the lenders needs then I would divest yourself of the responsibility and pass the accounts production on to a trusted accountant who will not poach your client.

Ann-marie · Senior Member

So, if the accounts are needed to be signed by an accountant, is this something that they would be happy to do even though they haven't done the actual year end accounts?

Just interested incase I have any requirements from clients in the future. I wonder how much they would charge?

Ann-marie

Silly Digits · Senior Member

I recently had a request which I filled in but this was rejected as I was not an accountant.

RobH · Expert

Further to Adi's point, they will normally accept hmrc confirmation of tax comp. Client will need to contact hmrc to request these, but in these days of self assessment it is only right that this should be accepted. Normally the mortgage provider will send a letter to the accountant and on that letter there is a list of acceptable accounting bodies and if you do not appear on it then the hmrc route is the only way to go.

Further to Shaun's advice, I usually add the following (not overly succinct but quite clear):

'The above information is given in good faith. XXXXXXX cannot accept any responsibility for any consequences from the action or inaction taken from the supply of this information.'

Rob

BackOfficeGroup · Guru

Rob

It may be the assumption that mortgage co's should be in the same century, but how many are? All too often, not just in our sector, people are not up to speed on how things are done or have changed. To go by the tax comp from HMRC would make sense!

Anne-marie

Bone of contention really. I doubt an accountant worth anything would just sign off a set of accounts without knwoing the background work etc and of course will always charge a hefty fee for the privelege. They know the score with mortgages etc so will be in the driving seat in this regard.

I would make friends with a mortgage broker to sus things out and you never know, they always come in handy.

P

Ann-marie · Senior Member

I didn't think that any accountants would want to be just signing off accounts, I think your right that they would charge a hefty fee for this even then i'm not sure if they would be to keen.

On the mortgage broker thing, my husband is a mortgage consultant, I was speaking to him about this and it seems that depending on what lender you are using for your mortgage depends on what financial information is needed. I guess the problem occurs when the client want a certain mortgage product but if the signed accounts are not by an accountant then they may have not be able to get the rate that they want as they do not meet the criteria.

I do think that this needs to be looked into further though, things have moved on so much over the last few years and as and when qualifiactions are gained we should be recognised for these by other sectors.

Ann-marie

BackOfficeGroup · Guru

I agree, maybe accounts plus the SA statements to prove the accounts match would be a good scenario to start with. Obviously this only goes to the self employed, as Directors of a Ltd co have payslips etc and dividend slips to prove their income.

Its true, there are many different lenders using many different methods, and now the self cert market is near enough dead, for some this poses a major problem!

P

hello_there · Newbie

Hi there...reviving a couple of months old thread here...

I have been working in an accounts practice for the last few years, preparing sole-trade and limited company accounts for clients, so generally speaking I know what I'm doing and how the accounts should turn out. However, I am not ACCA qualified, so can't sign anything off as the accountant.

For the last couple of years, I've also prepared my brother's annual accounts and tax return for him, as he is a self-employed carpenter, and doesn't know one end of a computer and spreadsheet from the other.

He's now looking to move out and get a mortgage and has just been told he needs 3 year's worth of audited accounts. Now naturally, the accounts I have prepared for him say unaudited and don't have an accountant's certificate or anything like that, so for all intents and purposes are done on self-assessment. Does this mean he is going to have a problem, and that his last 3 years accounts are worthless in terms of what the mortgage people need?

The SATR and accounts have always been accepted by HMRC without any issue, so wouldn't that be good enough?

Any help further to what's already been posted would be great - he's of course fretting, and I am a little too...

Shamus · Forum Moderator & Expert

Hi Rob,

actually a couple of years and a couple of months!

There's another issue in there that you are a related party to the person that you are preparing the accounts for although the likelihood of that being picked up by a lender is remote.

Generally you will find that whilst the banks would like audited accounts they appreciate that only larger entities have them and what they are really looking for are accounts prepared by a qualified accountant to give independant credibility to the figures.

The banks are more stringent from the outset than HMRC as with HMRC they can always come back later and say give us more where the banks are loaning money that they have to be sure that they will not lose.

As such, yes, your brother may have an issue securing a loan on the basis of the accounts (three years ago he wouldn't have!) but he could have the accounts verified by an independant accountant (not necessarrily chartered or certified). The cost would be very much dependant upon the volume and complexity of the trasactions and the verifiability of data (but I assume that you still have all original documents).

Size of deposit may make the bank a little more flexible in relation to risk born o much may come down the the amount of equity in the property. For example if he's putting down 40% then the bank may consider there to be no risk as on default they could simply take the house in order to get their money (including interest and legal fee's) back.

Hope that didn't come over as too negative,

kind regards,

Shaun.

Lyndsey · Senior Member

I had exactly the same question, I've been doing my other halfs self assessment accounts for the past few years (prior to becoming Member of ICB) & when we went to get a mortgage they wouldnt recognise his income based on his SA (Leeds BS were extremely strict). So managed to get what we needed on my income. However, now we are both self-employed I am interest in how we may get round this when we come to the end of our fixed deal (5 years). Hopefully I will be fully qualified with IFA (Financial Accountant) and be able to sign them off myself biggrin

hello_there · Newbie

Ha! i didn't notice it was a 2010 thread!

Thanks for your response - it didn't come across as negative, but it isn't the answer he'll want to hear

We do have all the paperwork and receipts to support the accounts I have prepared, so the verification from a professional seems like it could be an option. They are a simple set of accounts, nothing complex at all. I don't know whether my boss at work would be willing to verify them - I did use their software biggrin ...might be worth an ask.

What you said about HMRC vs the banks makes sense too unfortunately.

The deposit may be another sticking point as he can only afford in the region of 10%.

So based on all that, things don't look too promising for him, but he's got to go through the eligibility checks so we'll see what happens.

Thanks again for the reply

ClawzCTR · Guru

I have recently had this, and as i work with a Financial Advisor (mortgages etc.) I know what they need.All they want for the morgage application is an SA302, for the last few years, but always get more than you need that way you have them if the mortgage company needs them.

All you need to do to get them is to call HMRC and be the clients Agent. Speak to the lovely people at HMRC and they will send the required amount of years out to you. They only take about 10-14 days to get to you, BUT if you need them urgently they can fax them.

Hope my reply helps! :D

-- Edited by ClawzCTR on Wednesday 26th of September 2012 09:27:08 AM

gbm · Guru

Audited accounts... Bloody banks don't know what they want!