Mortage for Me (employed) + OH (self-employed)

nm123_2

Hello,

My boyfriend and I are saving for a house and expect to have at least 10% for a deposit in early 2010 (fingers crossed). I expect we'll be looking at places for max £250k, so would be expecting a mortgage of approx £225k.

OH went self-employed in June 2008 (after being employer-employed for years) and we've just got a chartered accountant to do his tax and they have suggested a net profit for the 08/09 tax year as £12k. I'm on £40.5k pa.

So I guess my question is: could we be succesful in applying for a 90% LTV mortgage of £225k?

We're FTBs and our credit histories should be pretty good (not checked for a while but my score was 945 approx 1 year ago), and we're also expecting OH's earnings to increase in the next 12 months or so (again, fingers crossed).

We could sit tight and keep saving into next summer (rented accommodation at the mo, no pressure to move out from the landlord) but I am getting antsy here and want our own place, and would also like to start a family in autumn/winter next year. Would having a higher deposit make much of a difference in terms of getting a mortgage? I'm concerned that the housing market might start to creep up out of our reach come next year :rolleyes:.

Thanks in advance for your replies.

Mrs_Bumble

I think to be honest you would struggle.

Your OH only has one year's accounts and that will restrict the lenders that you can approach.

Also even if you found a lender that would take the one years account that is joint income of 52.5K and so you would be looking for a big income stretch.

If I was you I would increase your deposit as you will get a much better interest rate with a 20% deposit and that will make a difference on a large mortgage, and wait until your OH has 2 years submitted accounts which will be what next June?

nm123_2

Thanks Mrs Bumble. Do his previous years' employment not really count at all then?

Yes, we'd ideally get cracking on this years accounts as early as possible. Do you think 2 years accounts at the same kind of profit will be ok? If not, what kind of level of net profit do we need?

Thanks!

koexelek

Sadly , these days, unless a self employed person has been trading for three years and has full accounts, they might as well be unemployed in the eyes of a lot of lenders.

herbiesjp

A self employed person is assessed on his self employed trading history - not his previous employed status

A lender has to see whether or not there is a track record of income there ready to sustain the mortgage amount

nm123_2

Ahh I see

Not looking good for us then...

herbiesjp

He can get away with 2 years accounts however with some lenders

But at 90% borrowing, options are limited

nm123_2

Ok thanks... I've had a pay freeze for the past couple of years, so I'm hoping that come the summer when our increases (if any) take place, I could perhaps go to £45k. Would this help much?

And also, what kind of net profit should OH be showing to get taken seriously when applying for a mortgage for £225k?

zarekr

Get your OH's accountant to put OH on the payroll at a salary that is high enough to qualify for the loan you need (and that the company can afford to pay). Wait 3 months and your OH will have 3 months' worth of payslips to show the lender.

The only complication will be if your OH owns more than 25% of the company in which case some lenders will want the accounts in addition to the payslips - I know northern rock and HSBC will request this - but there may other lenders that do not.

herbiesjp

What a great suggestion.... NOT!

nm123_2

zarekr wrote: »

Get your OH's accountant to put OH on the payroll at a salary that is high enough to qualify for the loan you need (and that the company can afford to pay). Wait 3 months and your OH will have 3 months' worth of payslips to show the lender.

The only complication will be if your OH owns more than 25% of the company in which case some lenders will want the accounts in addition to the payslips - I know northern rock and HSBC will request this - but there may other lenders that do not.

:huh: This confuses me. OH is a one-man band, not a company (or is that he is 100% of the company?? I might have a degree in international business and can tell you all about strategies etc, I never really got the accounting parts or plc vs ltd vs sole trader bits etc!!!!! :rolleyes:). He doesn't have a payroll...