Self employed, wanting to borrow 5.25x income

ncooper1974

Ok, so the title might seem a bit excessive, but here is my situation and i hope someone can recommend something for me.

I want to buy a house. valued at £500k.
I am selling my house in a private sale (to a family member) for £250k, and I also have about £100k in savings.
I dont want to use all the money as a deposit, and I've got £200k of it earmarked for a project sometime next year. So I'd like to put down £150k as a deposit, and borrow £350k.
I'm self employed (director of ltd company), with a declared income of £10k and dividends of £25k.
my wife is employed with a salary of £31.5k.
So on paper, we have a combined income of £66.5k, and are therefore looking to borrow 5.25x joint income.
i'm looking to go interest only as every year i take a large divi out of the company and will use this to make capital payments against my mortgage.

Trouble im finding is that most lenders wont lend me based on the income multiples, as opposed to my ability to repay the loan.
I was hoping to get an offset mortgage so that I can offset the £200k savings for at least a year, and thus cut down on my mortgage costs.

Nationwide will only lend me 3x salary i think, and i've just been on the phone to 1st Direct and they will only got as far as 4.


anyone recommend a lender that will take me on?

toonfish

you are going to struggle I think, unless you put down a larger deposit. Have you tried your own bank, they often have pre-approved limits for good customers?

ncooper1974

Nationwide are my current bank - they already said no.

Incisor

ncooper1974 wrote: »

... Trouble im finding is that most lenders wont lend me based on the income multiples, as opposed to my ability to repay the loan.

Let me verbalize the question the banks might be asking:

What's so special about you that you have ability to repay over and above the ability indicated by the proposed income multiplier?

You are taking out £200k - fair enough - for a project. With a bankers hat on, I would want to know all about this - and my concern would be that this money might need to be propped up by more money. I think I would want to see you choose between the house and the project and come back for the other one later.

Lipstick_2

There are lenders that base their lending on income multiples and there are those that base their decision on affordability.

You need a whole of market mortgage broker to find you those that base their lending criteria on affordability

toonfish

Lipstick wrote: »

There are lenders that base their lending on income multiples and there are those that base their decision on affordability.

You need a whole of market mortgage broker to find you those that base their lending criteria on affordability

from the top of my head I don't reckon those multiples will fit any affordability calculator under the current criteria

ncooper1974

Seeing as 1st Direct said that they will lend me up to 4x joint income, it looks like the only way i can get around this is to put down a more sizeable deposit, which will leave me less money for the project.
But i think under the conditions, I'd rather have the house and wait a bit longer for my project to start.

thanks to all for taking the time to reply.

luckyfool

You really need to speak to a broker. Two lenders who offer offset facilities that might get close to what you are looking for would be RBS under their One Account brand, and Woolwich on an Openplan offset mortgage.

I have run figures on their Broker Criteria (bear in mind some lenders offer more relaxed income multiples through brokers, presumably as the liability for the advice has been shunted onto the Broker to confirm affordability).

Assuming 2 household occupants, no dependent children, and no ongoing credit commitments then

One Account would consider £325k

With a high credit score Woolwich would consider £332,500.