Staged Income – What Mortgage Advisers Need to Know
In recent months, we have seen a marked increase in lender warnings issued to mortgage advisers regarding staged income cases, as well as instances of advisers being removed from lender panels. While panel removal can sound serious, it’s important to recognise that these situations are almost never due to advisers deliberately committing fraud. Instead, the primary cause is a lack of due diligence during the application process.
What is staged income?
Staged income occurs when an applicant’s earnings are artificially increased—often temporarily—before a mortgage application is submitted, to make affordability appear stronger than it truly is. This may happen through salary uplifts, additional bonuses, or overtime that does not reflect the applicant’s genuine, sustainable income.
Why does it matter?
Lenders view staged income as a significant red flag for mortgage fraud risk. Even if the adviser had no involvement in manipulating income, failing to identify or question suspicious changes can lead to loss of lender trust and removal from panels.
Red Flags to Watch For
When reviewing a case, consider whether any of the following apply:
- Unusual commute – Does the client live far away from their stated workplace without a clear reason?
- Dual full-time roles – Do they claim to have two full-time jobs, raising questions about plausibility?
- Recent pay rise – Have they received a salary increase shortly before the application?
- New employment – Have they only recently started a new job, especially if combined with a significant pay uplift?
- Income inconsistencies – Are there discrepancies between bank statements and payslips?
- Reluctance to provide documents – Are they hesitant or slow to supply financial evidence?
- Multiple adviser approaches – Have they already spoken to other advisers before coming to you?
What can mortgage advisers do to combat staged income?
- Scrutinise income patterns – Review payslips, bank statements, and employment histories for sudden, unexplained changes.
- Ask the right questions – Seek written confirmation from employers for recent changes in pay, including whether they’re permanent.
- Document everything – Keep clear notes of your due diligence to evidence your checks if questioned.
- Challenge inconsistencies early – Address anything suspicious before submission.
- Stay updated on lender guidance – Understand each lender’s criteria for acceptable income changes.
- Speak to compliance before submitting – If you have concerns, discuss the case with the Compliance team before submission. They can advise on whether the case should proceed and what additional due diligence may be required.
- Pass documentation to the lender – If you or Compliance have requested extra documents—such as employment contracts, tax documents, or other verification—ensure these are also given to the lender with the application. If a lender thinks you haven’t carried out sufficient due diligence, they may assume you are either complicit or lacking in skill—neither of which is good for your professional reputation. Make sure the lender can clearly see that you have followed the Know Your Customer (KYC) process and completed thorough checks.
Final thought:
With lenders increasingly vigilant, the onus is on advisers to spot, question, document, and share evidence of due diligence. Protecting your place on a lender panel is not just about avoiding fraud, it’s about proving to lenders that you act with skill, care, and diligence on every case.
Regards
Alan Baldwin
Director of Compliance & Operations
For any questions or queries, contact the Compliance Team
Call : 01708 676110
Email : compliance@connectmortgages.co.uk