First-time buyer but self employed...how can we do this?

SarahBrown_3

Hi,

My husband & I have been self employed, running our small business from our rented home for the past 6 years and as a result of a change of direction in our business 3 years ago, we are finally in a position to afford to start paying towards a decent mortgage.

We have a good sum of money together for a deposit too...but there's a problem...on paper we don't look like a great prospect for a mortgage company. We barely made a profit for the first 5 years of our business and it is only this past tax year that our earnings look anything like they need to for a mortgage company to want anything to do with us.

This tax year is already a huge improvement on last year & based on next years bookings mean we can already forecast an even better year next tax year...but we need the extra space that our own home would give us in order to expand our business.

Realistically, are we going to get laughed at if we apply for a mortgage? We are going to look around a house we like on Friday, but I'm not even sure it's worth doing without 2 or 3 years clear profit...is it?

Any advice would be much appreciated.

_Andy_

Hi

What deposit do you have, what's the property value and what kind of net profits are we looking at?

SarahBrown_3

Deposit: £27,500, property value: £129,000 and net profit last year: £13,000. This year will be much higher, as will next year.

_Andy_

And what's the projected net profit for this year, being realistic?

SarahBrown_3

about £18,000

_Andy_

5.63x income multiple - not going to happen I'm afraid.

SarahBrown_3

Thanks for the honesty...it was probably what I needed anyway...I was told there is a government scheme available to genuine first time buyers to loan them up to 50% of the value of the property...if we could somehow get £64,500 on a loan & pay the £27,500 deposit, we would only be looking at a mortgage of £37,000.

Or...we just rent a bigger place!