Credit Checks - when and how many?

foreversummer

Hi

I'm trying to obtain a re-mortgage to release some equity from our current home for a purchase abroad. Value of property £210000, current mortgage £37500, new mortgage required £95,000. Excellent credit rating.

Problem seems to be that my husband and I run a limited company so our income is made up of a small salary, dividends etc. Although we have accountant prepared accounts for the past three years, they do not show a true reflection of how much we actually earn. I also do part-time work PAYE but this is only a small part of our total earnings. I therefore feel that we should go down the self-cert route.

I've contacted our existing lender who we have been with for the past five years but they say that we will have to apply before a decision can be made. We may or may not be asked to prove our income during this process. This will of course involve a credit check and we are not yet ready to apply for the mortgage as we have not yet found the property we want to buy!

I contacted a broker who has said that they have contacts with companies that offer self-cert mortgages, but again they wish to pre-qualify us with a credit check before they talk to us about what deals are on offer.

Now, surely unless I'm being really silly, there must be a way that a broker/lender can tell you about the deals on offer and if we are likely to be accepted before running a credit check. I've read lots on this site about have too many credit checks going through.

All we want to do before we go househunting in France this summer is to make sure that we will be able to get the mortgage we need, and that the whole idea of borrowing this amount is feasible in our circumstances.

I've seen lots of discussion about finding a Whole of Marker Broker, but how do you actually find one. I've been through the Yellow Pages and none seem to advertise that they are Whole of Market, but it would appear that many charge a fee.

If anyone can point me in the right direction, I'd much appreciate it.

HelpWhereIcan

Most brokers will be confident enough to give you an indication of how likely you are to be accepted on a particular scheme - as long as all of the information they have from you is accurate.

The best way to find out is a broker is whole of market is to ask them - a phone call before you meet them should be enough - Martin gives some good questions to ask in
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1101649966,86816,

have a word with a couple and I would be surprised if all of them are unwilling to discuss possible deals. What you will have to bear in mind is that deals change all the time and the chances of a deal that is available now being available this summer are very slight, so you will have to look at it as a rough indication only.

Hope this helps

stanmoresaver

HelpWhereIcan wrote:

Most brokers will be confident enough to give you an indication of how likely you are to be accepted on a particular scheme - as long as all of the information they have from you is accurate.

The best way to find out is a broker is whole of market is to ask them - a phone call before you meet them should be enough - Martin gives some good questions to ask in
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1101649966,86816,

have a word with a couple and I would be surprised if all of them are unwilling to discuss possible deals. What you will have to bear in mind is that deals change all the time and the chances of a deal that is available now being available this summer are very slight, so you will have to look at it as a rough indication only.

Hope this helps

Just to echo HWIC's points- If you are portraying the whole situation to the broker- i would see no need to run a credit check and i would not. We would just wait until you were in a position to apply and do the deal.

Good Luck

SS

foreversummer

Thank you both very much for your replies.

As you are both brokers, can you shed some light on how lenders work out the earnings of a company director when applying for a mortgage? I think the Woolwich were trying to say that I take the companies net profit, add the director's salary, add the dividends paid and this gives the annual income. My husband and I have our own company but only he is salaried. I do however have PAYE earnings and also receive dividends from our company. Can I just add the dividends to my annual salary? Do they have to average the figures out over the last two or three years, or do they just take the most recent if the figures are more favourable. (Our business has expanded during the last year so the figures are better).

Any help would be most appreciated.

stanmoresaver

foreversummer wrote:

Thank you both very much for your replies.

As you are both brokers, can you shed some light on how lenders work out the earnings of a company director when applying for a mortgage? I think the Woolwich were trying to say that I take the companies net profit, add the director's salary, add the dividends paid and this gives the annual income. My husband and I have our own company but only he is salaried. I do however have PAYE earnings and also receive dividends from our company. Can I just add the dividends to my annual salary? Do they have to average the figures out over the last two or three years, or do they just take the most recent if the figures are more favourable. (Our business has expanded during the last year so the figures are better).

Any help would be most appreciated.

To be honest- the broker who submits the application on your behalf is the best person to ask this question of.

SS

HelpWhereIcan

If you are looking at going down the self cert route, most lenders will allow you declare your total income (although some will want it broken down into idividual sources eg salary/dividend/2nd Job etc). Therefore on a self cert, as long as the income you declare is accurate, you will find that you will not have a problem declaring what you actually get.

In the case of a deal where the lender may want to see proof of your income (which may get you a better deal), each lender will have different criteria so I would echo what SS says in urging you to discuss it with a broker (who will be able to take all the pertinent info to make a reccommendation).

As an indication, most lenders will allow some if not all of the dividend income (one I can think of takes all of it and allows you to gross up the dividend which can be very useful). Most will go from the last year (ie what you can prove rather than what you may be expecting for the year coming) but with some this can depend on your individual shareholding. The part time PAYE may be included, but some lenders will take a max of 50% of it.

The point I am trying to make is that because each lender has their own criteria, you may not need to self cert but the only way to find out is to have a proper review with a suitable whole of market adviser.

Hope this helps

infobank

You might want to give Intelligent Finance a ring:
0845 605 8585
http://www.if.com/

They say:
" if more than 10% shareholding then borrowers to supply letter from (chartered or certified) confirming salary and dividend drawn for the last 2 years"

They work on credit score and affordability.

infobank

Sorry, that should read "letter from accountant (chartered or certified) confirming ........