The Income and Expenditure, which is also referred to as a Financial Statement, is a very important document and must not be rushed. It must be carefully structured in accurate detail as this demonstrates your ability to manage your monthly finances. This states what your income is and where it comes from.
As far as your expenditure is concerned there are standard guidelines that exist that give banks and mortgage lenders an idea of what it costs to run a family with two children and two cars etc. The standard information that all lenders have access to is known as the “Common Financial Statement” and this is used to make sure that your income and expenditure is in line with average spending patterns. It also allows you to see where you are maybe spending too much and where you maybe not be allocating enough to secured debts or prioritising a Debt Management Plan over your Mortgage arrears. This is frowned on by the Mortgage Lenders and indeed the court.
It is also important to have evidence of your income and expenditure such as payslips, evidence of any pensions, income from family and any Lodgers etc. in writing as the court and the lender can only believe what they can see in black and white and again this needs to be sufficiently detailed.
In addition to evidence of income if you have any exceptional short term outgoings that are making you short of cash then these need to be backed up with evidence as well, such as Council Tax payment arrangements, any Attachment of Earnings Orders etc. it is important to explain what these extra payments are for and how long the payments will last for as once paid this could be extra money towards your Mortgage arrears.
Be aware of being forced to go through an Income and Expenditure over the telephone with the lender as they will use this information and it is very difficult to unravel what you have said if it later transpires that is was incorrect. Explain to the lender that you do not have time and that they should send you an Income and Expenditure to complete, either that or you should prepare it yourself and take a good hour and be sure it includes ALL income and all expenditure.
Another valuable point is to also be aware of a visit from a “Debt Counsellor” sent by the Mortgage Lender to “Discuss your Case” or “Help to Structure a Plan” these visits are a waste of time and they are designed to give the lender an opportunity to get all your details and then use the information against you. The majority of these “Counsellors” are self-employed and they have NO AUTHORITY to agree any arrangements other than take down the details and report that back to the lender. It is likely that the “Counsellor “will say that everything should be fine but this very often not the case and almost every time we have had clients that have had such an appointment it has been a complete waste of time and the Lender has refused to provide any assistance and declined the offer that was “Recommended” by the “Counsellor”.
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