Self Cert?

racheyg

Hello All

Very excited, have just accepted an offer on our house. We have a mortage of £245,000 and we have just accepted £330,000.

Now, what to do. Since taking out our previous mortgage (Northern Rock, 5 years fixed rate, two years left). We really struggled to get this mortgage (my partner and I bought my ex out, paid him half), and we were left in debt). If this goes through, we will completely clear our debt and have about £30,000 left.

However, our income streams have changed. Our original mortgage was based on two full time salaries, but now we have two part time salaries, plus a new business income, plus I have child maintenance from my ex.

Our two part time salaries bring in gross £56,000 a year.
My maintenance is £1000 net a month
Our new business self employed earnings is anticipated to be £30,000 this year (half of it won already), but we obviously do not have much of a history with this business (6 months only).

Our credit ratings are both excellent, although obviously our debt has been dire, but always paid off on time etc.

We are thinking of renting initially, as we can save a higher deposit, but we wondered whether we would be eligible for a self cert mortgage, and for how much. We have been paying £1500 a month on just interest on our debt (don't get divorced!) and we have had a really bad few years, so this is a light at the end of the tunnel, if it works out!

Any advice? Oh, and can we take our Northern Rock mortgage with us or will we have to pay the 'get out' charge?

Thanks for listening! x

_Andy_

How much are you wanting to borrow/what property values are you thinking of? (you may not need to self-cert)

racheyg

Hi Andy

Don't really know yet what to do. We were thinking of renting initially but were looking at the options. We have no idea whether to rent and buy a buy to let, buy straight away, buy a house that needs doing up ... we have no idea what our options are as we have spent the last five years buying cheap sausages and trying desperately to make ends meet, and to have some options would be (hopefully) overwhelming.

_Andy_

The reason I ask is that if you limit yourself to self-cert options this means you'll need a higher deposit (think 25% but I stand to be corrected). It will also mean higher interest rates (as there is more risk to the lender).

Given you have a sizeable joint income (from the salaried jobs that is), you could probably borrow 3.5-4.5 x that without needing to think about the self-employed income.

However it all depends on what property values you're thinking off - with £30k in your pocket you could just scrape a 10% deposit on a £300k property (although that doesn't allow for fees, stamp duty etc).

If the maintenance is via a court order, there are lenders that will allow that as income that can be taken into account.

It may be worth you having a chat with a decent broker.

Kavanne

with those incomes you should rent a while and save save save the most massive deposit you can!! then you'll need an independent advisor to find a deal that will accept you.


make sure the accounts from your new business are all in order to present, you may have to have 2 years of them before you can get a new mortgage...unless you don't want to use the extra income to get the mortgage. I mean 56k is a large joint income by itself, but of course it all depends on how much you want to spend.

racheyg

Aw thanks guys. I really hope it goes through because I think we could do with some good luck. We are a dab hand at 'saving' now but the money won't be going on debt! What a great feeling. OK we're not worth much but we are real scrooges compared to what I used to be like, a lesson to all I would say.

racheyg

If we rented would we be seen as first time buyers?

_Andy_

No you wouldn't.