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Mortgages for the self employed

ahouse
ahouse Posts: 3 Newbie
in House buying, renting & selling
Hello all,


I have a query about applications for mortgages for the self-employed. I am employed and my partner is self-employed. We are in the process of saving for a deposit which we predict will take at least two years to save for. We recently spoke to a friend who purchased a year ago as part of a couple in the same situation (one employed and one self-employed) and were told that only a quarter of the self-employed applicant's salary was taken into account. This worried me since we are both relatively low earners so we need as much of our salaries as possible to be taken into account. I knew getting a mortgage when self-employed was pretty difficult as it was but I assumed if successful the whole declared salary would go into the calculations. There is limited advice online and no mention of the quarter of a salary so any advice or insight would be much appreciated!
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Comments

  • Brightspark87
    Brightspark87 Posts: 1,466 Forumite
    First Anniversary First Post Combo Breaker Debt-free and Proud!
    Hi

    You need to speak to an independent mortgage broker. It may cost you some £££ but worth every penny to get you a mortgage. Don't go to the bank or estate agent either.

    Paid off all Catalogues 10.10.2014
  • kingstreet
    kingstreet Posts: 38,754 Forumite
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    On the whole, lenders take the latest two years' earnings from SA302s and average them.

    As with an employee, these are then multiplied by about 4.5.

    They don't take a proportion. Not for any reason I can think of.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • hazyjo
    hazyjo Posts: 15,470 Forumite
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    Brightspark87 wrote: »
    Hi

    You need to speak to an independent mortgage broker. It may cost you some £££ but worth every penny to get you a mortgage. Don't go to the bank or estate agent either.

    They often don't cost - they take their commission from the mortgage providers.


    If you use one linked to an EA, yes, they are likely to charge (and, as above, best to avoid them anyway).


    Jx
    2023 wins: *must start comping again!*
  • hazyjo
    hazyjo Posts: 15,470 Forumite
    First Anniversary Name Dropper First Post Photogenic
    Check out Step 3, point 2.


    http://www.moneysavingexpert.com/mortgages/best-mortgages-cashback
    2023 wins: *must start comping again!*
  • tiger_eyes
    tiger_eyes Posts: 1,006 Forumite
    First Anniversary First Post Combo Breaker Debt-free and Proud!
    I had three full years' SA302s and they offered me a bit more than 4.5 times my income. No problems whatsoever.
  • neo2020
    neo2020 Posts: 50 Forumite
    It really depends on your circumstances but this issue about them taking 25% of your income is nonsense.

    My wife and I are both self-employed and in the process of a mortgage application.

    I strongly recommend you contact an independent mortgage broker, whether paid or not, and ask them if they have experience of dealing with mortgages for self-employed people.

    The value of a mortgage broker is they can help you apply to a lender that is actually going to lend to you based on your particular criteria (for example, my wife and I needed a lender that would lend based on last year's income figures, rather than a 2 or 3 year average) - a broker knows which lenders will be willing to lend to you and which will not.
  • kingstreet
    kingstreet Posts: 38,754 Forumite
    First Anniversary Name Dropper Photogenic First Post
    In no particular order, there are lenders who will;-

    lend on one year's trading
    lend on latest year's figures when an average won't work
    lend based on company profits, not director's remuneration and dividends (SA302s)
    lend based on an accountant's certificate, not accounts or SA302s
    lend based on SA302s, not accounts or accountant's certificate
    lend based on accounts, not accountant's certificate or SA302s
    lend based on gross contract value for "contractors."

    Finding the right broker will result in you getting the best deal for your individual circumstances and the right mortgage from the first application.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • Brightspark87
    Brightspark87 Posts: 1,466 Forumite
    First Anniversary First Post Combo Breaker Debt-free and Proud!
    Just to say with fees - I had to pay a fee up front and then if there was shortfall for my brokers costs from the commission payable. IE he wanted a total of £750 of which £99 was paid upfront.

    Paid off all Catalogues 10.10.2014
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    What's the nature of your friends self employment?
  • kingstreet
    kingstreet Posts: 38,754 Forumite
    First Anniversary Name Dropper Photogenic First Post
    FWIW our fee is £250, if you don't buy from one of our builders. Nil, if you do.

    Procuration fees are typically 0.32% (paid to us) of the amount borrowed, so on a £150k mortgage we would earn a total of £730.

    Being in the West Mids, we do a lot of sub-£150k cases so we mostly earn less than £700 a case.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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