Remortgaging with low income- what are our options?

lily10

Hi
I took voluntary redundancy from my job 2 years ago to go self-employed in my husband's business. As a result we have gone from a joint income of c.£55k from c.£40k ( my previous income) + c£15K ( husband's income) to just my husband's income whilst supplementing this each month with my redundancy money which we put into our business.

We have a fixed rate mortgage with Abbey due to run out in December and I will need to either remortgage with them or look for a better deal. However, I am concerned that I will be restricted in my search by our now low income multiple.

We have a house worth about £330,000 and our mortgage is £134,000. On the basis that we have a low LTV will lenders still refuse us a mortgage due to the low income multiple and/or is it necessary to divulge our income at all? Our business is starting to do well and I don't foresee a problem in meeting payments inthe future but I am just concerned as to what our options are at this point.

Any advice really appreciated ! Thanks

minimike2

Best bet will be to stick with Abbey. They will offer you a new deal without the need to re-asses your income etc.

I would doubt that any other high street lender would give you that much on that income. regardless of LTV.

sdooley

As the Dragons would say - that's not a business it's a hobby. You are subsidising the business (which nets you less than 1K a month) with your redundancy money? So two adults working full time at less than minimum wage.

Can you even go back to work part time?

lily10

sdooley wrote: »

As the Dragons would say - that's not a business it's a hobby. You are subsidising the business (which nets you less than 1K a month) with your redundancy money? So two adults working full time at less than minimum wage.

Can you even go back to work part time?

Wel - the purpose of my post was not necessarily to discuss the finer issues of our business as it was a mortgage question. ..BUT ...
The business is now starting to do very well. Whilst I quoted £15k as my husband's income - this is from his 2006-7 tax return; before I started in the business with him and his partner.
We put my redundancy money in to help cash flow and arrangements are in place due to that fact. Turnover is up 40% and profit up 50% 2007-8 and things are looking really good for this financial; a long way to go admittedly but we are getting there and prospects are very good. Problem here is that for mortgage purposes we would be looking at tax return for 2006-7 and clearly that is not too impressive!
So the purpose of my post was to understand what options were available to us given the current scenario.

_Andy_

Only option will be to stay with Abbey as £15k isn't going to be enough for any lender.

lily10

Thanks for replies - my initial thought is to stay with Abbey BUT what are self- certified mortgages then? My understanding was that if we have a low LTV which we have at approx 46% then we might not need to declare our income. Can someone please enlighten me on this one as my understanding is probably a little off mark?
Thank!

_Andy_

You would need to declare your income so any fast-track or self-certified mortgage would involve lying about your income so would be mortgage fraud.
Additionally self-cert rates are going to be higher than what you could get with Abbey anyway.

abc

There used to be mortgages a few years ago that you didn't need to declare your income. I remember Mortgage Express used to have one which I think they called a "Non-Status" mortgage. You could borrow up to 75% but the interest rate was quite high.

Unfortunately I think government regulation effectively killed off this type of loan, so I don't think these type of mortgages are available anywhere anymore.

sdooley

£22,500 (50% increase in profits) is still not a living wage for two people.

And that is profit, not cashflow. The business is clearly not cash-generative as you have had to add further cash in while profits are low. Much of the profit for tax purposes will be illiquid in fixed assets or, worse, stock. To avoid a huge shock when the working capital runs out - which will only happen quicker once you go onto SVR on your mortgage - you must consider getting a job in the ordinary economy.

You are clearly capable of earning high figures - if you want to support the dream of your own business before the recession hits you both for six you will be best doing that by getting a salaried job. Otherwise you could quickly end up with no business, no job opportunities while lay-offs are going on all around & in serious danger of losing your house.

Wutang_2

sdooley wrote: »

£22,500 (50% increase in profits) is still not a living wage for two people.

And that is profit, not cashflow. The business is clearly not cash-generative as you have had to add further cash in while profits are low. Much of the profit for tax purposes will be illiquid in fixed assets or, worse, stock. To avoid a huge shock when the working capital runs out - which will only happen quicker once you go onto SVR on your mortgage - you must consider getting a job in the ordinary economy.

You are clearly capable of earning high figures - if you want to support the dream of your own business before the recession hits you both for six you will be best doing that by getting a salaried job. Otherwise you could quickly end up with no business, no job opportunities while lay-offs are going on all around & in serious danger of losing your house.

This Sdooley is my favourite...Q: What mortgage should I go for?...A: Your business will fail - go and work full time for someone. Thank you