Mortgages for self employed / franchisees

slaney

Please could someone help and give me some general information.

I am about to start a franchise business as a franchisee. My wife and I are living in 4 bed rented at the moment (having sold our house and got out before the crash) but would now like to buy. She works for the NHS. We have a reasonable deposit and with her salary we could buy a modest 2 bed house right now. However the other option is to remain in rented for 12-18 months and to buy hopefully a 3 bed based on her income and the income I have generated from the franchise business, assuming I achieve my projections. The other factor in this is of course how house prices might change over the next 12-18 months.

My question to you financial guru's is how would a mortgage lender view just one year's accounts? Does it make a difference that this is a franchise and therefore a less risky way of developing a business? Should we buy now or wait until we have a years accounts signed off?

Thanks in advance
slaney

Shakethedisease

A lot of the High St lenders actually want three full years accounts if you're self-employed, some are happy with two but not many.

I got a mortgage based on one years accounts but that was with a semi-subprime lender with big fees and @ a 6.15% rate over 3 years. That was with a 30 % deposit. ( I also had a small ccj though too ). The mortgage was also based only on my income, not including my husbands.

With one years accounts, I'd probably say that you should concentrate on saving up as large a deposit as you can over the next year and take it from there. With both of you working you will probably be looked on more favourably with a good deposit towards the house you want.

Hopefully someone more knowledgable that me will be along in a minute to advise you better as I'm only going in my own recent experiences.

Good Luck !

Conrad

With a 25% deposit a lender might not require income proof, but that would generaly only be where the applicant has stated 3 or more years trading.

If income proof is requested then it's typically 2 years+

Franchise business' have the same risk profile as non franchise, in light of failures such as costa coffee and many burger king outlets closing.

I was thinking about a franchise myself in the next few years - KFC seems very robust (although perhaps unethical for chickens) as the food can 'sit' for hours without having to be thrown away unlike most other big franchise food business'. But you need £1m minimum in cash for them to even consider you!

What franchise are you in, if you don't mind?

slaney

Conrad,

I have a long background in IT and I am looking into a franchise IT support business. I am not yet committed. However I am at the verge of being so and I like what I see. If you want the URL for the exact business then send me a PM.

slaney