Self-cert availability

meester

I'm not looking to buy at the moment (obviously!), until prices have dropped another 10% or so, but just curious what kind of finance I would be able to get, so we have an idea what we might be able to buy.

I'm a director of a one-man limited company with a couple of years accounts showing about £125k/year in sales, and almost no costs other than my own payroll, pension, etc.

I'd be able to put down a £200k deposit. We could be looking at a £800k property, so 75% LTV, hence potentially £600k mortgage.

Any thoughts?

Is self-cert still available?

Conrad

Self Cert is available, but not good value. Us brokers are in a perpetual state of difficulty; On the one hand the FSA wants us to act in accordance with the letter, but on the other they want us to Treat Customers Fairly. TCF to my mind means avoiding the expensive self cert route, afterall a client is at greater risk of repo the higher the payments are.

There are other LEGAL methods that are better value, and I'm not just talking 'Fast Track' here. An experienced broker will know about these other options.

minimike2

Bank of Scotland have some pretty decent self cert deals now (they dropped thier rates this week) at 75% LTV. Others would include Platform, Kensington, GE Money - but dont have attractive rates. I think Godiva may still be offering Self Cert too although I might be wrong there and would need to check.

Do you definately need to self cert? What are your net profits showing (as this is what lenders go on). Some lenders will also take into account an accountants letter with a years projections, although its getting harder and harder to use these nowadays with the current state of the market.

herbiesjp

If you have got a verifiable source of income - via your accounts - I do not see the need for a self cert mortgage

You can only get a mortgage based on your declared earnings either PAYE or accounts/self assessment.

If you have got other sources of income, these too could be taken into account depending on the lenders, however they would need to be from sources that are again declared

Fast track is not a replacement for self cert, and should not be used as such, as when the lenders come asking for proof of income (be it self cert or fast track) you will have to provide something.

Lenders reserve the right to ask for whatever information they deem necessary for an application - even with self cert!

Apart from that, why go for a self cert deal at higher rates, if you can get a standard high street deal?

meester

herbiesjp wrote: »

If you have got a verifiable source of income - via your accounts - I do not see the need for a self cert mortgage

You can only get a mortgage based on your declared earnings either PAYE or accounts/self assessment.

If you have got other sources of income, these too could be taken into account depending on the lenders, however they would need to be from sources that are again declared

Fast track is not a replacement for self cert, and should not be used as such, as when the lenders come asking for proof of income (be it self cert or fast track) you will have to provide something.

Lenders reserve the right to ask for whatever information they deem necessary for an application - even with self cert!

Apart from that, why go for a self cert deal at higher rates, if you can get a standard high street deal?

Apologies, I'm not really up with all the products. Net profit was £81k year 1, £104k year 2, both prior to tax. Unaudited (no accountant).

What sort of multiple can you get on that?

minimike2

Is there a second income too? You shouldnt be borrowing £600k on those figures. (I would say £450k max would be sensible / acheiveable with a mainstream lender).

herbiesjp

meester wrote: »

Apologies, I'm not really up with all the products. Net profit was £81k year 1, £104k year 2, both prior to tax. Unaudited (no accountant).

What sort of multiple can you get on that?

Assuming a good credit history and a good credit score with the relevant lenders you could be looking at somewhere between 4 - 5 times income

Are you just starting year 3? Or are those figures being done just now? Will they show another increase from year 2 figures?

If so, they could bring you up to the kind of level you are looking at

However, you would really need to look carefully at what that kind of loan amount means to you in terms of monthly mortgage payments, and how that will fit in with your current monthly expenditure/monthly dispoable income

Just because you may be able to get the mortgage, does not necessarily make it the right thing to do

At that kind of loan amount, a slight change in interest rate will make a big difference to your mortgage payments

meester

minimike2 wrote: »

Is there a second income too? You shouldnt be borrowing £600k on those figures. (I would say £450k max would be sensible / acheiveable with a mainstream lender).

I have a second income which would cover a £600k mortgage, but as it's through betting and poker, it's not something I could disclose to a lender.

Wutang_2

meester wrote: »

I have a second income which would cover a £600k mortgage, but as it's through betting and poker, it's not something I could disclose to a lender.

Hahaha - you plan to fund the mortgage on gambling profit??...any brokers out there fancy this one??

minimike2

I meant income from a parter.

I think you need to be realistic and not look at such expensive properties. It seems yiou are asking abotu self-cert with it already in your mind that you are going to lie about your income. Not a clever move. Buy within budget - whats the point in getting something you cant afford, only to be repossesed?