He cited a current case involving a Dubai-based client paid in US dollars, where the lender converted the income into sterling, applied a haircut, and then treated the reduced amount as gross sterling income. Upton said that approach could meaningfully understate affordability where the borrower pays no local income tax.
“That’s a touch unfair, because that is his net income — he pays no tax in Dubai,” he added. “So in effect, lenders are deducting the haircut and then treating that reduced number as gross, which means they’re assuming another 30 to 40% will be taken for tax, when actually none will be.”
For advisers, Upton said the core obligation had not changed. Brokers still need to explain the risk profile, stress-test affordability and ensure clients understand exposure to interest rate movements. The difference, he said, is that volatility has made those risks more apparent.
“You have to explain the risks,” he stressed. “You have to explain the risk profile. Clients are exposed to interest rate movements and to volatility around the world.”
In an uncertain market, Upton’s message to fellow advisers is simple: the fundamentals of good mortgage advice have not changed. What has changed is how urgently clients need to hear them.
