Stuck between a rock and a hard place :0(

Supercali

Not sure that anyone can help but just here to gte it off my chest.

After applying for the Post Office self-cert 85% LTV remortgage, we were turned down today as the CC debts we have are too high for them to risk, even though we were going to pay them all off and the extra mortgage payment would have been a quarter of what we are paying for CCs each month :sad:

We now have a house with a half-built extension and no money to pay for any more work as DH stupidly paid for a lot of the work using CCs thinking that he could just use equity in the house to pay them off :rolleyes:

We can only opt for self-cert as we have a lot of income that isn't accepted as income.

minimike2

Do they know that the cards will be paid off? Sounds like you need to call them to explain.

Failing that there are other lenders that will consider you.

What is your credit history like? There could be a couple of prime lenders that would consider you on a self cert.

Can I ask why you need to self cert (in more detail than what you have put)? - i.e breakdown of income?

Supercali

Yes, they know that we would have been paying all the debts off but it probably doesn't look good that DH has maxed out on £60,000 worth of credit . We haven't defaulted on any mortgage payments but there have been plenty of late payments on the CCs as being self-employed, the cash flow isn't exact.

DH is a contractor and we have a ltd company and earn a min wage as employees and claim a lot back as expenses and the rest as dividends. The expenses account for quite a slice of our income but no-one seems to accept this even though our accountant has supplied figures. We bank through Lloyds TSB and have our current mortgage with C&G (for 10+ years) and have had no problems in the past with mortgages and remortages but now they don't want to know.

minimike2

Hmm. Yes probably would have been a better idea to get the mortgage sorted before spending the money for the improvements. But whats done is done.

How long has the LTD company been running for? / how many years accounts? Im assuming the net profit figures are quite low and there are directors loans etc? Its always the downfall of being self employed....allowances and tax laws are great, until you come to apply for credit.

Late payments will cause a problem for prime lenders (Post office is Bristol & West who have moved away from non-conforming) and the LTV of 85% would be difficult also on a sef cert. What is your exact LTV?

You should be able to get a mortgage, it just doesnt look likely it will be "high street"

neverdespairgirl

Supercali wrote: »

DH is a contractor and we have a ltd company and earn a min wage as employees and claim a lot back as expenses and the rest as dividends.

Unless you are into tax fraud, expenses are to repay actual money you shell out, and aren't income in any real sense.

silvercar

neverdespairgirl wrote: »

Unless you are into tax fraud, expenses are to repay actual money you shell out, and aren't income in any real sense.

There are a lot of things that can be classed as expenses to reduce tax bills, but in reality are a way of drawing profit out of a company.

Simple examples are the heating/ lighting for the office in your home as a proportion of your utility bills.

IR allows 40p per mile for "work" journeys. It doesn't really cost that, even with current petrol prices.

neverdespairgirl

silvercar wrote: »

There are a lot of things that can be classed as expenses to reduce tax bills, but in reality are a way of drawing profit out of a company.

Simple examples are the heating/ lighting for the office in your home as a proportion of your utility bills.

IR allows 40p per mile for "work" journeys. It doesn't really cost that, even with current petrol prices.

If you take into account depriciation, insurance, tax, servicing, and MOT, even? It may well do.

You can't complain that you class money you have coming in as expenses to avoid being taxed on it, and then complain it's not counted as income, though.

Gloster_Advise

This sort of mortgage application makes my blood boil I am so sorry. If you were to declare the correct amount etc you wouldn't be in this position. You can't have it both ways. Dependant on circumstances you may have to be forced to go non-conforming irrespective of what you think your repayment history and credit is like. Most lenders DO NOT like 85% (reststrictions will apply) self cert let alone high street ones as minimike said. If you have to go to non-conforming please be in for a massive shock coming off C&G's SVR if you are on that.

Bear what me and others have said about income delaration in obtaining in the future. The biggest loan you will take is your mortgage so please unsure you have the means to provide income if the !!!! hits the fan again in the future and you still need mortgage products.

HelpWhereIcan

Trying to be constructive here I think you will find that the main issue is the late payments on the cards rather than the balance you have on them.

One option you may want to consider is getting a secured loan for the additional £60k. Depending on the exact figures involved it will be possibly be cheaper than going non conforming on your whole mortgage.

This will mean that the main mortgage can be left with C&G on what is hopefully a competitive deal (or you can do a product transfer rather and remortgage to another lender to get a better deal than SVR).

Although the rate available as a secured loan is likely to be higher than available as a non conforming mortgage you may find that overall it is cheaper eg

£210,000 over 25 years on repayment on a self cert deal that accepts 'minor adverse' with someone like First National would cost about £1707 pm assuming 8.5% ish being the rate available (IIRC).

Putting £150,000 on C&G's 3 year fixed at 6.39% would cost about £1002 based on 25 years repayment.

A secured loan for £60,000 over 25 years could cost £588 pm assuming you get a rate of about 11%. That would put the total cost to about £1590 for the secured loan and product transfer option.

That way, you could buy yourselves say 3 years to get more suitable accounts and for deals to improve at which point you can remortgage to bring the secured loan into the main mortgage.

Please bear in mind that (other than the C&G deal) I have 'guesstimated' the rates available as a near prime self cert and secured loan - you may be able to get lower or higher than those I have assumed. I am not even sure that 'self dec' is still available at 85% for secured loans.

You may even have to look to put part or all of your mortgage on interest only to make it affordable.

You may even want to look at debt management/an IVA rather than securing the debt on your property - the main aim has to be to protect your home.

Point I am trying to make is that your circumstances cannot relly be addressed in a forum. You need to be talking to a mortgage broker who can look at all the options - mortgage, secured loan, personal loans, debt management etc without charging you a silly fee (although you may have to pay one in the current market).

HelpWhereIcan

While I agree with the main thrust of your argument

neverdespairgirl wrote: »

You can't complain that you class money you have coming in as expenses to avoid being taxed on it, and then complain it's not counted as income, though.

I have to be play pedantic devil's advocate

neverdespairgirl wrote: »

If you take into account depriciation, insurance, tax, servicing, and MOT, even? It may well do.

and say that (in respect of those using a privately owned car) it could be argued that employed people pay for these things out of their net income anyway and that they tend not to have those costs deducted before their income for mortgage purposes is calculated.

(I did try to resist posting this - for 40 mins - but just could not help myself)

Supercali

HelpWhereIcan wrote: »

While I agree with the main thrust of your argument



I have to be play pedantic devil's advocate



and say that (in respect of those using a privately owned car) it could be argued that employed people pay for these things out of their net income anyway and that they tend not to have those costs deducted before their income for mortgage purposes is calculated.

(I did try to resist posting this - for 40 mins - but just could not help myself)

:T Thank you! We are not doing tax fraud or declaring anything that we don't get. We do a hell of a lot of miles each year. The company charges the clients for expenses and we, as employees with our own personal cars, claim back our mileage.

Thank you for the constructive replies. We got the letter from the Mortgage co who turned us down and said it was due to the 'excessive level of debt' though they appreciated we always paid them and we would have been paying them off. I don't bear any grudge against them as they gave good reason for refusal.

We have decided against a secured loan and have decided to go for the interest only option on the current mortgage and try and pay off what we can on the highest interest CCs first. Still trying to get DH to consider DMP.