Tuesday, May 26, 2015
A family or a house – your choice
It is sensible for banks to look at mortgagees costs but under the UK's tax system whereby single income households are taxed at a much higher rate than dual income ones, more and more couples have to choose between having children or ever owning a home. The only way to escape single income punitive rates is to become a contractor under a limited company and distribute dividends to the non-working spouse, but this just about rules you out for a mortgage anyway. Quite a few people who I worked with have done this, but they all have lots of home equity and/or long fixed rates so can sit and chomp down the mortgage. After a few years of contracting banks will look at you again, but with caution as they don't have a permanent pay cheque to trouser.